Despite a 14% return in the Indian stock market in the past month amid the Russia-Ukraine conflict and other influential events, Nithin Kamath of Zerodha believes "It's quite stupid to be buying only stocks."
In a conversation with ETMarkets, the founder and CEO of India's largest stockbroking firm — which is often touted as India's answer to Robinhood Inc. (NASDAQ:HOOD) — said he believes it is important to have a good mix of fixed income or debt and equity to be on the safer side in times of drawdowns.
"We don't know if Covid has gone away. It is making a comeback in China. Then there is inflation. There could be many second and third-order effects of liquidity, apart from inflation itself. And we are still dependent on foreign flows into the country. The risk of some foreigners taking money away at a much larger pace is there, and then there is the geopolitical tension. If the war escalates tomorrow, then it is a problem," Kamath added.
The Zerodha CEO suggested that one should first start trading part-time to see if they are good at it and should then only take the decision of plunging into it full-time.
Echoing a similar note — in an interview with CNBC-TV18 — JP Morgan's managing director and head of Asia-Pacific equity research James Sullivan said that the Indian equity markets look fairly priced, if not expensive, at current levels.
Sullivan highlighted that looking at the earnings expectations, the Nifty 50 pack looks demanding, and there is a risk of disappointment on that front.
Meanwhile, due to the stay-at-home orders introduced to curb the pandemic, the number of retail investors has more than doubled in India in the last two years. A record number of 3.4 million new demat accounts were opened in India in January this year.
Stocks like Adani Green, Adani Power, Reliance Industries Ltd., Alkyl Amine Chemicals Ltd. and Paytm saw high interest from retail investors. Large-cap U.S. stocks like Apple Inc. (NASDAQ:AAPL) and Tesla Inc. (NASDAQ:TSLA) are also rising in popularity with some retails investors, who are searching for opportunities abroad.
