Redefine Your Investments With Some Global Touch

Investing In Global Markets Can Act As A Hedge Against The Investor’s Indian Portfolio.

- Himali Patel

The foreign investors continuous sell-off, widening fiscal deficit spurred by higher oil prices and weakening Indian currency had briefly pulled down local equities below the 34,000 mark on the Bombay Stock Exchange (BSE). Further, the S&P BSE 150 mid cap index has declined by 16 per cent from its all-time high in January 2018. The fall of the S&P BSE 250 small cap index has been more severe, shedding 26 per cent as on November 16, 2018, from its historic high.

With the upcoming state elections and General Elections, the market is expected to remain choppier. And as they are a reflection of the current worsening macro-economic conditions, it is difficult to guess where the bottom would be. Under such a phenomenon, it is suggested that the investors should diversify their investment portfolio to cover up the risk associated with the fluctuating economy. They can spread out their portfolio through geographical diversification rather than sticking to conventional asset classes like domestic equities, debt, commodities.

Investing in the global markets shifts risk and acts as an insurance against such wild swings. That said, over the past few years, Nifty 50 index has given better returns as compared to Nasdaq. But lately, Nasdaq index has outperformed. Recently, the absolute returns from almost all mutual funds invested in Indian stocks have ended in red, while those mutual funds which had an exposure to global stocks have given positive returns, according to a HDFC securities research report. (See the Graph: Absolute returns of MF investment in Indian stocks)

Going Global