In this context, it should be expected that the prices and interest rates would go up and rupee value would come down.
In the present economic scenario, the best option for investment is in gold, a gathering of investors was told at an awareness meeting organised by Coimbatore Capital Limited (CCL), in association with National Stock Exchange, here on Thursday.
Explaining the impact of the Union budget on economy, D. Balasundaram, chairman, CCL, predicted a rise in prices on account of the budget proposals. With expenditure consuming 82.6 per cent – 34.2 per cent on payment of interest, 20.7 per cent on defence, 20.3 per cent on subsidies and 7.4 per cent on salaries – there was every possibility of lending rates going up. It was also not known how the provisions of Food Security Act would be implemented with just three per cent increase in allocation for food subsidy, compared to 2011-12. If the government wanted to bring down the subsidy for petroleum products their prices had to be increased. Will this be possible in a coalition set-up, he wondered. Mr. Balasundaram felt that if the subsidies were not brought down prices would go up. He pointed out that the problems faced in the economy of nations of European Union were bound to have an impact on global economy.
In this context, it should be expected that the prices and interest rates would go up and rupee value would come down. In the event of deficit in balance of payment going up, foreign investment would trickle down. He informed investors that it was advisable to invest in gold rather than in deposits, real estate or scrips.
The character of gold, he explained, was that its prices appreciated whenever there was an economic problem. Investment in Exchange Traded Fund was better than in physical gold, if it was meant only as an investment, he added. Investment in stock market would also be a good protection against inflation but the investor should make careful estimates and calculations and should not be greedy or avaricious but should exercise patience. It was now possible to invest even in overseas stock markets.
Sunitha Anand, Southern Region Head, National Stock Exchange, in her address on ‘Recent development in capital market,' highlighted the need to manage one's income well to beat inflation. She said that the dynamics of share trading had changed and NSE provided opportunities to trade in other products, like commodities, also. She said that the best option for investment should be the mutual fund. S. Karthikeyan, professor, Jansons School of Business, in his talk on ‘Investment ideas,' spoke about the impact of budget on various sectors and how one should take investment decisions based on the budget.
Earlier, Sahitya Akademi award winner S. Venkatesan, was honoured by Mr. Balasundaram. ‘The Hindu' was the media partner for the event. D. Ramesh, Head, Business Development, welcomed the gathering and N. Vijayakumar proposed a vote of thanks.