Risk-reward: gold or equities as market tumbles

MUMBAI: At a time when the world markets are tumbling like nine pins, with India no exception, where can one look to invest or safeguard ones investment? Two fund managers speak whether this is the right time to go for equities or play safe and go for gold.

S Krishnakumar, fund manager and head of research, Sundaram BNP Paribas Mutual:

The most important thing you need to realise that markets have reached the 'capitulation' stage. And contrary to widely assumed notion, it is the right time to invest in equities. It is important to go for those companies which would form a crucial part of a large diversified portfolio. In one sense, it is crucial to see at companies which have reasonable liquidity in their balance sheet. Equities at this stage of markets mustn't be ignored.

Devendra Nevgi, CEO and CIO, Quantum AMC:

I think there are two asset classes that would definitely stand out in the coming quarters. First is gold, as it acts as portfolio insurance. At a time when there is uncertainty, virtual loss of confidence across the board, it makes sense to invest in gold. Second is equity, especially companies in oil and gas and banking sectors. A significant part of our funds is invested in markets, which reflects that it is time to shop in equities.

Even though the tilt is shifting towards rewards than risks, India's fundamentals are intact and it is commendable that we have withstood the impact of the US crisis. India would grow at 6-6.5 per cent, which is almost three times the rate which the global economy is growing. And to facilitate this is the fall in inflation and crude oil prices (fall to $93).