Money Guru: How will rising interest rates in the US affect the Indian markets? Is this an opportunity to increase investment or is it a time to act wisely? Expert decodes

Money Guru: There is a decline in the global market. How will rising inflation and rising interest rates in the US affect the Indian markets and domestic investments? Is this an opportunity to increase investment or is it a time to act wisely? Where to invest in equity and debt in the downturn of the market? Can one build a strong portfolio even in a volatile market? The expert Vijay Mantri, co-founder of JRL Money explained this in a popular TV Show 'Money Guru'.

Fear of recession in US!

"Interest rates in the US have risen. The inflation in the country has also increased. The inflation rose by 4 times - from 2% to 8%. With this, the risk of economic recession in the country has also increased," Vijay Mantri said.

Why has inflation increased?

"There are many reasons for the rise in inflation - such as Ukraine-Russia tensions, post covid side effects, and supply chain disruptions globally. Apart from this, China sold cheap goods to the world for many years, inflation has increased due to the creation of the deflationary environment, the focus on ESG and clean energy has increased and there has been less investment in oil, gas, metal, thermal - these are also the reasons for increasing inflation," Vijay Mantri added.

What is the impact of rising rates on India?

"The expert said rising rates do not have much effect on the economy. The 10-year G-SEC has grown 3% - 8% in 2003-2008.
Debt money in India is in FD, PPF, EPFO, and Insurance. Long-dated bond funds have very little exposure. The returns in the debt portfolio are expected to increase by 20-40%. AUM of debt in mutual funds is more than 50%," Vijay Mantri opined.

Market Performance
Duration                                  NASDAQ                    NIFTY
Last 5 years                            20% CAGR               12% CAGR
Last 10 years                          19% CAGR               12% CAGR

MF performance
Duration                                     2008                          2022
Last 5 years                            50% CAGR                12% CAGR
Last 10 years                          34% CAGR                12% CAGR

Opportunities in which sector?
-banking sector
-auto
-pharma
-IT

Where not to invest?
-FMCG
-crypto
-New Tech IPO
-Chemical
-High PE Multiple Stock

Where is the opportunity?
- Invest in Equity Mutual Funds
- Avoid direct stock for the time being
- Buy when the market is down
- Investment Opportunity in Long-Term Debt MF
- Invest direct stock money in mutual funds
- Invest FD money in debt mutual funds
- Invest in Equity through STP for 6-12 months