I plan to invest Rs 80,000 in bonds for listing gains. I don't want to invest for long. Which is better: tax-free bonds or tax-saving ones?
It is difficult to say whether you will get listing gains and in which type of bonds, since yours is a short time horizon. Investments should be for the long run, depending on the need to save tax on current income or generate tax-free income flows over an extended period.
In this regard, make an assessment.
My investment advisor pointed out that only sectoral funds (fast moving consumer goods, pharma) are giving positive returns. He suggested I include these in my portfolio as a defensive strategy. I invest Rs 12,000 a month in three balanced funds via the systematic route. Should I divert these towards the sectoral funds?
When markets fall, defensive sectors tend to insulate the portfolio from losses to an extent and, therefore, your advisor’s suggestion.
However, when markets start recovering, defensives may not perform as well as other high-beta stocks.
Since you are invested in balanced funds, this means you have chosen a mix of fixed-income instruments and equity. Balanced funds are already defensive, compared to an equity fund. Therefore, it would not make much sense to divert funds.
With the budget approaching, which sectors do you think may get more incentives? And, which can one consider for making trading gains over the next month?
It is risky and difficult to pick sectors from a short-term trading perspective, based on an event such as the Union Budget, since your expectations may or may not materialise.
The writer is CEO, Dalmia Securities. Views expressed are his own. Send your queries at yourmoney@bsmail.in
