Gold and bitcoins have delivered sparkling returns since last Diwali

This Diwali celebrations may be subdued due to the Covid-19 pandemic, but investors do not have too much to complain about. Stocks indices have been hitting life-time highs over the past week and real estate prices are also looking up. Investors in gold and bitcoin will, however, be the happiest, if the returns since last Diwali is considered.

Gold glitters

In these times of uncertainty, gold prices have soared over 30 per cent due to safe haven buying of gold ETFs and bars and coins. While jewellery demand has been tepid so far, jewellers expect good demand for gold this Dhanteras with just about a 15-20 per cent decline in volumes.

“The future still looks bright for gold prices considering the festival demand and end of uncertainty linked to US elections. Further, the additional stimulus measures to deal with the pandemic and lower real yields backed by higher inflation across the globe may support the gold prices,” said Sunilkumar Katke, Head - Commodity and Currency, Axis Securities.

Investors, who chose to be more adventurous and invested in crypto assets, would have raked in the most, with the crypto asset gaining 64 per cent since last Diwali. But with the ongoing uncertainty over regulations, not too many would have invested in these assets.

Equities revive

Equity markets dipped to multi-year lows in March over concerns about the pandemic but have since then steadily recovered with the S&P BSE Sensex crossing the 43,000 level this month.

Since Diwali last year, the BSE Sensex has gained over 11 per cent while the Nifty50 gained 9.6 per cent.

“As we enter Samvat 2077, the markets have seen a complete recovery from the Covid lows, in-line with the improving data points and positive corporate commentary. More importantly, Covid-19 cases have seen a meaningful decline. Improved corporate earnings have also buoyed the market sentiments,” noted Motilal Oswal Financial Services in a recent report.

Investors who parked their money in banks will, however, not be too happy with returns from bank deposits being muted with interest rates heading south. The repo rate moved from 5.15 per cent last October to 4 per cent with the Reserve Bank of India trying to spur growth.

This has hurt bank deposit holders. State Bank of India, the country’s largest bank, is offering an interest of 4.9 per cent for retail term deposits of less than ₹2 crore with a tenor of one to less than two years. For senior citizens, this is slightly higher at 5.4 per cent.

As expected, real estate prices have been subdued, though there has been some renewed demand in recent months. The all-India House Price Index rose 2.8 per cent in the first quarter of the fiscal on an annual basis, according to the Reserve Bank of India. The quarterly HPI for the April-June 2020 period is based on transaction-level data received from housing registration authorities in 10 major cities.

However, according to the Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q3 2020 Survey, 40 per cent of the respondents the third quarter opined that prices with regards to residential markets would increase in the next six months while 38 per cent opined that they would remain at current levels.

"While clearly equity markets witnessed a sharp decline at the start of the year with a decline of almost 40 per cent in the a matter of few weeks but now has recovered all its losses rising like phoenix to trade at life time highs, as we approach the end of what has been a tough year. From previous Dhanteras to this Dhanteras Nifty Index has actually gained 6.7 per cent giving positive returns to patient investors. However, the other two asset classes Crypto and Gold has outperformed the equity market returns. Crypto currency Bitcoin has gained a mammoth 70 per cent from previous Dhanteras to this Dhanteras and Gold has also added an impressive 30 per cent to its tally from previous Dhanteras,” said Aditya Agarwala, Senior Technical Analyst, Yes Securities.

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