Amid global risks, Indian retail investors increase their allocation to bonds and fixed deposits

Amidst global economic uncertainties and fluctuating equity markets, fixed-income instruments are experiencing a surge in popularity among retail investors in India. From corporate bonds and G-Secs to Non-Convertible Debt (NCD) IPOs and NBFC Fixed Deposits, investors increasingly allocate 15% to 20% of their portfolios to these stable assets.

Experts like Abhijit Roy, CEO of GoldenPi, highlight the accessibility and potential returns of secondary market bonds and NCD IPOs, emphasising the importance of due diligence and understanding associated risks. With regulatory reforms enhancing the safety and affordability of corporate bonds and the availability of G-Secs to retail investors, the fixed-income market is witnessing a dynamic evolution, influenced by RBI's policy decisions and broader global economic trends.

Abhijit Roy, CEO of GoldenPi

Rising Interest in Fixed-Income Investments Amid Market Volatility:

Retail investors allocate 15%-20% of portfolios to fixed-income assets like high-yield bonds, NCD IPOs ( ₹10,000 min), and NBFC fixed deposits.

Market outlook:

Secondary market bonds offer returns of 8%- 14%, but they come with risks like defaults and interest rate fluctuations. NCD IPOs yield 9%- 12%, while NBFC FDs return up to 9.45%, but they lack bank FD security.

Corporate Bonds vs. G-Secs:

Corporate bonds are growing at a 12% CAGR, with ₹600,754 Cr in new issuances. GSecs remain popular with low-risk investors.

Market Outlook & Investor Strategies Amid Global Uncertainty

Prof. Srijith Mohanan (JAGSoM) highlights the uncertain outlook, with global risks like US trade barriers and AI disruptions affecting Indian markets. Despite recent equity market corrections, high valuations remain, and potential rate cuts could make bonds more attractive.

Narinder Wadhwa (SKI Capital) recommends a diversified and cautious investment approach to navigate potential market volatility under a new Trump presidency. He suggests focusing on quality stocks and defensive sectors (FMCG, healthcare) and hedging with gold and bonds. While acknowledging potential challenges for IT services, he identifies opportunities in pharma, FMCG, infrastructure, and renewable energy, fueled by potential U.S. infrastructure spending. Ultimately, patience and a long-term investment horizon are essential.

According to Narinder Wadhwa (SKI Capital), a Donald Trump presidency could bring market volatility, especially for IT and pharma. He advises investors to diversify, focus on quality and defensive sectors (FMCG, healthcare), and hedge with gold and bonds. "Opportunities exist in pharma, FMCG, infrastructure, and renewable energy, despite potential IT challenges. Long-term strategies are key," he added.

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Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.