Investor appetite for real estate and gold is likely to tamp down, helping draw more funds into the equity markets, said Navneet Munot, Chief Investment Officer, SBI Mutual Fund, here on Saturday.
“Real estate prices have risen quite a lot in the last five years and not much incremental money is likely to go into this sector. If gold prices stabilise at current levels, then the charm for gold is also likely to come down. A fall in bond prices might make earning double-digit returns on fixed income unlikely. In such a situation, equities will draw interest in the days to come,” Munot said at a seminar on capital market trends organised by the Calcutta Chamber of Commerce.
Profitability
Union Finance Minister P. Chidambaram had also indicated that investors should contain their “uncontrolled passion” for gold and instead use financial instruments to save.
The easing of interest rates and commodity prices might help improve corporate profitability and capital efficiency. “Interest rates seem to have peaked and are likely to come down, commodity prices are also lower and the currency is also likely to stabilise at current levels. This will help improve margins,” Munot said.
The improvement in corporate profitability and capital efficiency will soon help boost the Indian equity markets, said Bharat Shah, Executive Director, ASK Investment Holdings.
“Corporate sector profitability seems to have hit rock bottom and from here on, we expect things to look up. There is also likely to be improvement in capital efficiency. Both these factors together will help the equity markets ,” Shah said.