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Vivek

Vivek Shah  |60 Answers  |Ask -

Financial Planner - Answered on Feb 14, 2023

Vivek Shah is a SEBI registered investment advisor and certified financial planner from FPSB India. He has over 18 years of experience in financial planning.
Shah founded Finrise, a financial planning and wealth management firm, in 2011. He believes that equity investment is the only way to generate long term wealth.
He has an MBA in finance, a degree in chartered accountancy and is a registered life planner from Kinder Institute of Life Planning, USA.... more
Rohit Question by Rohit on Feb 05, 2023Hindi
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Hi Sir, How do you expect the banking and defence sector stocks to perform in 2023. Which banking/defence stocks would be worth buying on dips. My investment horizon is between 1-2 years

Ans: Hello Mr Rohit,

First of all as an investor and also managing your family finances, you need to answer following questions before deciding on additional investments in equity markets:

1) Goal or financial goal or purpose of doing investment.
This will matter a lot as a goal of child education and retirement needs to see with different perspective and also should have asset allocation and market cap exposure accordingly.

2) Time Horizon of your goals- this is very important as it will help you to select the asset class and it's allocation based on your time period of financial goals. This is where investor makes biggest mistake of misalignment of asset time cycle and goals time period. If you allign this properly, your journey will be quite smooth.

3) Optimum Return expectations on your capital invested-
If you are saving and investing for some better future to fulfill your goals offcourse you will ask something in return which should be respectable higher returns than inflation for long term period( more than 7 years). If you are investing in India than equity return assumptions and calculations should be based on 12% return expectations and debt it should be 6.5%. Remember that you should assume practical return assumptions ( not the highest or what your friend says) as you can put any number in the excel sheet for your mental satisfaction😃

4) Risk taken on your capital-
Risk is a very negative word being taken in india but actually it's the risk appetite and risk acceptance of an investor which makes his outcome/ returns favourable. Understand one thing that if you want high returns you have to assume high risk and there is no option for it or an investor has to be happy with sub optimal returns if he is not ready to take risk.

Risk according to me is the capacity of a person until where and when he will not have any palpation in his stomach and he can absorb the downside easily( both realised and majority of time unrealised).

You should remember one thing that after deciding on above parameters, TIME IN THE MARKET IS MORE IMPORTANT RATHER THAN TIMING THE MARKET. As an investor, wealth is created over a period of DECADE and have your allocation to equity accordingly and enjoy the journey of markets which is going to be up and down.
After looking at all these parameters you can think of taking allocations to equity stocks or equity mutual funds and decide how much additional allocation to equity stocks or equity mutual funds is comfortable to you. If you dont have any prior expertise in investing in mutual funds or equity markets, its better to hire an advisor to help you do that or start with allocation in Equity Diversified mutual funds which will help you to take exposure in stocks.
Both Banking and Defence sector stocks are being allocated in various mutual fund schemes and also there are sector schemes for Banking and Financial services.
Regarding defence stocks, please find the below stocks which are considered to be having maximum benefit of Defence sector growth in india.
1) Hindustan Aeronautics Limited
2) Bharat Forge Limited
3) MTAR Technologies
4) Bharat Electronics Limited
5) Bharat Dynamics Limited
6) Rossell India Limited
7) Mishra Dhatu Nigam Limited
8) Paras Defence Space
9) Mazagaon Dock Shipbuilders
10) Solar Industries.

And after all that, i would say it's your behaviour and emotions management which will help you create wealth in the equity market.

As a retail investor, one should do the due diligence based on the above points and then one must consider the decision of investing in the company.

I hope this helps. Happy investing

Disclaimer: This is just for educational purpose and this should not be taken as advise for buy or sell.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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