Kotak MF MD Nilesh Shah cautions investors that investing due to gray market premium (GMP) can be risky.
When there is a flood of IPOs in the stock market, investors often get excited and invest money without thinking. Nilesh Shah, MD, Kotak Mutual Fund, believes that you should look at IPO from the same perspective as you look at any share in the secondary market. Before investing money in any company, think about whether you want to stay there for a long time.
Do we look at GMP while investing money in IPO?
Kotak MF MD Nilesh Shah cautioned investors that investing in ‘grey market premium’ (GMP) can be risky as it is an unregulated market and its data cannot be trusted. The good thing is that SEBI is now ensuring that only quality businesses come for IPO, but it is still your responsibility to understand the valuation and act wisely.
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Global diversification is necessary in portfolio
In today’s time, it is not right to be limited to only the Indian market. According to Nilesh Shah, it is very important to have global diversification in the portfolio i.e. investing in foreign economies. Many such business models are not available in India which are making waves globally. For example, we don’t have electric car companies like Tesla or social media giants like Meta (Facebook). To take advantage of these areas, you should invest in the global market. You can invest directly outside under the LRS limit.
However, till last year, the Indian market was giving such good returns that people did not understand the need to look outside, but now awareness is gradually increasing. It is important to have knowledge while making global investments, so that you do not sell your portfolio in panic due to fear of any negative news.
Should the value of gold be increased in the portfolio?
Talking about gold and silver investment, he said that gold always acts as a protective shield against inflation. However, gold and silver do not have any ‘intrinsic value’ of their own, hence a limit should be set for investment in them. In recent times, heavy purchases by central banks have supported gold prices, while silver has remained bullish due to industrial demand. As long as this demand continues, prices will remain high. He advised to invest only a limited portion of your portfolio in gold and silver, whether it is five percent or twenty, it depends on your risk appetite.
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