Investors reap rich harvest in both equity and gold amid huge volatility in FY24

With both equity and gold prices hovering around record highs, market experts believe investors should review their portfolio and book some profit from equity for allocation to gold, as it has more steam to rally after the US rate cut.

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The equity markets have rallied on the back of sustained inflows from retail investors, even as foreign portfolio investors pulled out money at frequent intervals this fiscal.

The bellwether Sensex has rallied a whopping 14,545 points, or 25 per cent to 73,651 points on Thursday, the last trading day of this fiscal, against 59,106 points logged on April 3, 2023.

Incidentally, gold spot prices have also rallied 29 per cent to ₹67,252 per 10 gram on Thursday from an average of ₹52,192 in the June quarter on the back of the Israel-Hamas conflict, the ongoing Russia-Ukraine war, and global concern over inflation.

Though it has now become common for both major asset classes to move in tandem, gold remains attractive given the global geo-political issues, while concerns about the high valuation of equity persist.

Palka Arora Chopra, Director, Master Capital Services, said, “After a dizzying rally, it is always a good time to rebalance a portfolio to lock in returns by booking profit.”

“Investors can consider gold as a hedging tool for inflation and economic uncertainty and diversify investments based on risk appetite,” said Chopra.

“On equity inflows through mutual funds, she said few investors may cancel their SIPs out of fear if the market falls sharply, but aggressive investors should consider it an opportunity for rupee-cost averaging, she added.

‘Gold to fare better’

Mukesh Kochar, National Head of Wealth at AUM Capital, said, “The debt market will also do well from here on as interest rates have peaked out and global interest rates may start coming down around midway through the next calendar year in India.”

Gold is also expected to fare better with the US Fed cutting rates, and the dollar index may come down from here onwards, he said.

Nirpendra Yadav, Senior Commodity Research Analyst, Swastika Investmart, said, “Gold and silver are expected to gain traction on the US Federal rate cut; tension in the Middle East and the presidential election in a major economy this year may elevate bullion prices.

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Gold prices still look good at the current levels, and investors can add 30-40 per cent gold and silver to their portfolios as the interest cut may kick off inflation in the coming months, he added.