Risk Alert — Omicron & Taper

Wondering how the new variant #omicron and a possibility of an interest rate hike by RBI can hurt your portfolio?

First, let’s take a look at the events unfolding around the world

-Global Indices around the world have started witnessing a steep decline with fears of the Omicron variant.

-The Omicron uncertainty has generated alarm at a time when supply chain deadlocks are impacting economic recovery and central banks globally are contemplating a return to pre-pandemic monetary policy to tackle a surge in inflation due to increased liquidity.

-More importantly, this is also a time when most countries including India and the U.S have indicated that would reduce the current liquidity which may lead to a taper risk (panic reaction caused by restricting quantitative easing by central banks)

How can this affect your portfolio?

- Equity options build resilience by allocating to top quality funds with a strong emphasis on underlying Fundamentals. The return of India’s private capex cycle indicates that companies have been utilizing the Covid-19-induced economic disruption to become leaner and financially healthier resulting in fresh investments in capacity addition and expansion.

What can you do?

Choose to move to equities in a slow and staggered manner over the next 12 months.

-Debt options should take into consideration both, the long and short maturities mitigating downside risk caused by liquidity tightening.

What can you do?

Choose to allocate to Floating rate, roll-down, barbell and accrual oriented-strategies from the best quality fund houses and management teams.

#investments #rbi #taper #sensex #nifty #equities #mutualfunds