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Emerging headwinds for equities could start the rally in equities in 2022 as the US stops pumping money into markets and increases rates. Rising inflation can drive up interest rates and bond yields. So what should be your strategy in New Year…
FD: 2022 should be a good year for FD investors. If inflation remains high or increases, banks will need to increase deposit rates
TIP: Decision to break up FD moving to a higher rate would depend on the applicable penalty and whether the higher rate warrants it.
OBLIGATIONS : If interest rates rise, it is possible to buy quality corporate gilts and papers at a higher yield and
get higher rates for the long term. For traders, however, the market would be volatile and offer good opportunities for gains.
POINT: Go for short-term bonds to avoid a capital loss
MF | Stick to large cap and flex cap equity funds, short term bond funds and conservative hybrid funds, as both fixed income and equity markets could experience high volatility.
POINT: Continue with the existing plan.
STOCKS: Volatility is likely to dominate the New Year. The end of the US Fed’s easy monetary policy and rising interest rates will force foreign fund managers to look for low-risk assets. This could weaken the rupee. The spread of Omicron and any other future variants could be of concern.
TIP: Stick to blue chip and large cap stocks
GOLD : The yellow metal has been a hedge against inflation and volatility. As 2022 is expected to witness both, gold prices are expected to rise. On the other hand, if the rise in rates in the United States can lead to a strengthening of the dollar, a negative factor for the price of gold. A weaker rupee and inflation could support the price of gold.
TIP: The price could hit a new high
CRYPTO: Investors are increasingly interested in cryptocurrencies, despite the resistance of many countries to recognize crypto as legal tender or as an asset. There are central banks that are launching their own digital currencies. 2022 could be a defining year for virtual currencies.
TIP: Expect extreme volatility to continue
FD: 2022 should be a good year for FD investors. If inflation remains high or increases, banks will need to increase deposit rates
TIP: Decision to break up FD moving to a higher rate would depend on the applicable penalty and whether the higher rate warrants it.
OBLIGATIONS : If interest rates rise, it is possible to buy quality corporate gilts and papers at a higher yield and
get higher rates for the long term. For traders, however, the market would be volatile and offer good opportunities for gains.
POINT: Go for short-term bonds to avoid a capital loss
MF | Stick to large cap and flex cap equity funds, short term bond funds and conservative hybrid funds, as both fixed income and equity markets could experience high volatility.
POINT: Continue with the existing plan.
STOCKS: Volatility is likely to dominate the New Year. The end of the US Fed’s easy monetary policy and rising interest rates will force foreign fund managers to look for low-risk assets. This could weaken the rupee. The spread of Omicron and any other future variants could be of concern.
TIP: Stick to blue chip and large cap stocks
GOLD : The yellow metal has been a hedge against inflation and volatility. As 2022 is expected to witness both, gold prices are expected to rise. On the other hand, if the rise in rates in the United States can lead to a strengthening of the dollar, a negative factor for the price of gold. A weaker rupee and inflation could support the price of gold.
TIP: The price could hit a new high
CRYPTO: Investors are increasingly interested in cryptocurrencies, despite the resistance of many countries to recognize crypto as legal tender or as an asset. There are central banks that are launching their own digital currencies. 2022 could be a defining year for virtual currencies.
TIP: Expect extreme volatility to continue
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