The Indian stock market’s character has fundamentally changed, becoming more resilient and less vulnerable as domestic SIP flows have made local investors the marginal price-setters, says Rajkumar Singhal, CEO of Quest Investment Managers.
In an interview with Ritik Raj of Business Today, Singhal said that for a retail investor starting today with a 10 to 15-year horizon, the core principle should be equities for growth, debt for stability, and gold for diversification, recommending a 65–70% allocation to equities.
1. For a retail investor starting today with a 10 to 15-year horizon, what is the ideal asset allocation strategy in this environment?
For a retail investor starting today, the core principle should be “equities for growth, debt for stability, and gold for diversification.” Over a 10–15 year horizon, India’s structural story — driven by formalisation, financialisation, and digitalisation — argues for equity-heavy portfolios. A 65–70% allocation to equities (through diversified funds or PMS) allows compounding to work in your favor. Around 20–25% in high-quality debt (target maturity funds or short-duration bonds) provides ballast during volatility; it also helps to manage cash flows. The balance 5–10% in gold or global ETFs adds an inflation hedge and currency diversification. The key is discipline — consistent SIPs, periodic rebalancing, and resisting market timing.
2. We’ve witnessed a historic shift with domestic investors, powered by SIPs, becoming the dominant force in the market. How does this fundamentally change the character and risk profile of the Indian market?
India’s market character has fundamentally changed. With monthly SIP flows exceeding ₹20,000 crore, domestic investors have become the marginal price-setters, reducing dependence on foreign capital. This “localisation of ownership” makes markets more resilient — less vulnerable to global risk-off episodes — but also more valuation-sensitive in the short term. The steady SIP inflows act as a counter-cyclical stabiliser: they absorb volatility during corrections and sustain momentum in recovery phases. The risk profile is evolving from sentiment-driven to long-term, where corporate profit growth and policy stability drive direction. In effect, Indian markets are maturing — moving from being “FII-owned” to “India-owned.”
3. For a young investor, what’s the ideal equity-debt-gold allocation for the next decade?
A young investor’s greatest advantage is time. With a 10-year-plus horizon, compounding in equities should dominate. Any mix should take into account your own risk profile and cash flow needs. A prudent mix could be 75% equity, 20% debt, and 5% gold. The equity portion should blend large-cap stability with mid-cap and small-cap growth potential. Debt adds liquidity and psychological comfort — at current yield levels, short-duration funds or government-backed instruments work well. Gold remains a hedge against unforeseen global shocks or inflation spikes. Over time, the focus should shift from chasing returns to asset allocation: increasing SIPs with income growth, rebalancing annually, and staying invested through cycles.
4. The bond market is finally opening up to retail investors through platforms like the RBI Retail Direct scheme. For someone looking to build a fixed-income portfolio for the first time, what is the simplest and most effective strategy?
For a new investor entering fixed income, simplicity and safety should guide choices. Begin with government-backed instruments — RBI Retail Direct, Bharat Bond ETFs, or target maturity funds that offer visibility on returns. Avoid frequent trading; instead, lock into a laddered approach where maturities are staggered across 2, 5, and 10 years. This cushions reinvestment risk while allowing liquidity. As comfort grows, add select AAA corporate bonds or short-term debt mutual funds. The focus should be on predictability and post-tax efficiency rather than chasing yield. In the current 7–7.5% rate environment, a well-structured bond portfolio can complement equity allocations effectively.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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