Want to enter D-Street now? Read this before you hop on the buy-on-dip bandwagon

Foreign institutional investors, who are worried over expensive valuations in a rising interest rate scenario, are using any rise in Indian stocks to sell while domestic investors are using the dip to buy. Market data shows that domestic investors, led by retail investors, have been able to offset around 80 per cent of the Rs 2.2 lakh crore outflow by foreign investors so far in 2022.

But before you join the buy-the-dip brigade and invest your hard earned money in risky assets in a volatile market, it is imperative to figure out the right asset allocation strategy. ETMarkets reached out to various experts to figure out what is the best way to invest Rs 10 lakh at a time when Nifty is near its 52-week low and the near-term outlook remains grim.

Most experts suggest that long-term investors with a high-risk appetite must bet on equities as the pain is seen subsiding in the medium to long term.

Here’s how to invest Rs 10 lakh at this stage:

Dr. Joseph Thomas, Head of Research, Emkay Wealth Management
For an investor who is moderately aggressive, one can invest 60 per cent in equities and the rest in very short-term debt with an option to re-deploy another 20 per cent of very short debt into equity over the next two to three months.

Sunil Damania, CIO, MarketsMojo
We suggest a portfolio approach with a proper allocation based on your risk appetite for largecap, midcap, and smallcap market mix.

At the same time, you may also want sector exposure, not beyond 30 per cent in one sector. This can help diversify your portfolio without taking too much risk when investing Rs 10 lakh.

Hence, we suggest selecting 10-12 stocks from different sectors and market caps to create a portfolio for yourself.

Amit Jain, Co-Founder, Ashika Global Family office Services
One should invest 40 per cent in the banking sector, 30 per cent in IT stocks and 30 per cent in the pharma sector. Pick quality stocks. This weightage can help investors create much higher alpha compared to any other sectoral weightage.

Prakarsh Gagdani, CEO,
Valuations post the recent correction have become reasonable but the near-term risks remain high due to the weak global scenario. Thus, if one is looking to start fresh, then he/she can allocate 60 per cent towards equities at current levels and 40 per cent in bonds.

However, if the market corrects further then a gradual increase in allocation towards equities should be done at lower levels which would be beneficial in the long term. So this should not be a one-time activity, but investors should review the markets from time-to time and accordingly make necessary changes.

Sonam Srivastava, Founder at Wright Research
A high-risk investor could have a 15 per cent fixed income allocation along with equities. A medium-risk investor can work with 25-30 per cent allocation to fixed income and bonds, while a conservative investor can look at 50-60 per cent fixed income allocation.

Gopal Kavalireddi, Head of Research at FYERS
Irrespective of the environment, it is imperative that investors focus on the time-tested principles of asset allocation, based on risk profile, financial capabilities and investment goals. First and the foremost guideline to be followed by any investor is to understand his/her risk profile, and determine if he/she is a conservative investor, moderate investor or an aggressive investor.

Based on this, an appropriate asset allocation can be arrived at, depending on the investment horizon.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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