ETMarkets Smart Talk | Is gold the new growth asset? 3 reasons why yellow metal rose 28% in 4 months: Ajit Banerjee

In this variation of ETMarkets Smart Talk, we spoke with Ajit Banerjee, President and Chief Investment Officer astatine Shriram Life Insurance, to decode the singular rally successful gold.

With prices surging astir 28% successful conscionable 4 months, golden is nary longer seen arsenic conscionable a harmless haven—it’s emerging arsenic a superior growth asset.

Ajit breaks down the 3 cardinal factors fueling this surge, including assertive central bank buying, planetary macroeconomic uncertainty, and inflationary fears.

He besides shares insights connected plus allocation strategies successful a low-interest-rate environment, marketplace volatility, and wherever investors tin find semipermanent worth successful today’s turbulent times. Edited Excerpts -

We are seeing immoderate volatile swings successful the markets, acknowledgment to the back-and-forth from Trump connected tariffs and present immoderate geopolitical concerns amid tensions betwixt India and Pakistan. How are you looking astatine each this?

A) We are each alert markets bash not similar uncertainty of immoderate type, and by nature, it is forward-looking. Hence, it reacts either positively oregon negatively depending upon the underlying developments.

Presently, astir of the countries are grappling with the tariff turmoil and the perceived antagonistic interaction connected its economical maturation erstwhile the impermanent intermission is over.

There is excessively overmuch uncertainty and disorder emanating from the tariff announcements followed by rotation backs, past pause, which is adding to these uncertainties.

India is amended placed comparative to galore countries chiefly for the pursuing reasons:

1) The archetypal tariffs announced upon India connected 2nd April astatine 26% was comparatively little than galore different countries, adjacent though it wasn’t the lowest.

2) The home marketplace is ample capable to devour a important portion of bully and services produced successful the country, truthful the interaction of outer shocks gets moderated to a large extent.

3) India contributes 2.7% of the US imports, 18% of its exports (2.2% of GDP) beryllium connected US demand, posing a mean hazard contempt little nonstop exposure

4) India is besides successful beforehand stages of bilateral talks with the US, which is expected to make a win-win concern for some the countries

5) India remains the fastest increasing large system adjacent aft the caller downward revision by the IMF and different agencies to 6.2% GDP growth.

6) The caller geo-political escalation betwixt India and Pakistan is surely a disturbing quality arsenic immoderate signifier of warfare isn’t desirable. However, the marketplace seems to discount immoderate important interaction of this imaginable hazard astatine this constituent of time.

7) USD has weakened significantly, and ostentation levels are going up, truthful there’s a anticipation of a stagflation happening arsenic US and US banal markets aren’t charismatic now

Keeping each the supra into consideration, we are seeing affirmative signals for the clip being, which is starring to FIIs, DII, and retail investors again participating.

Having said that, we request to beryllium precise vigilant arsenic we request to spot what is yet coming retired aft the 3-month intermission gets over.

Q) It looks similar we person entered a low-interest-rate environment. What should the plus allocation strategy beryllium for an idiosyncratic successful the property bracket of 30–40 years?
A) With the commencement of a complaint chopped rhythm successful Feb’25 by the RBI and consequent announcement of alteration of stance to accommodative by the MPC, it tin beryllium construed that we person entered into a low-interest complaint environment.

Whilst property of the capitalist is an important determinant successful readying the portfolio operation of an individual, 1 besides needs to see the existing fiscal commitments, obligations, and priorities earlier deciding connected an plus allocation strategy.

Assuming that the idiosyncratic has a corpus for investments, past helium whitethorn possibly allocate his portfolio successful the proportionality of 60:30:10 (Equity: Fixed Income: Commodities). Again, determination are a big of options disposable wrong these which should beryllium planned on with a nonrecreational portfolio advisor.

Q) What is your instrumentality connected the results that person travel retired from India Inc., and what are your expectations for the adjacent fewer quarters?
A) Getting into the results play of Q4FY25, the thoroughfare expectations were rather muted some connected the net and connected the gross side, adjacent though successful Q4 immoderate greenish shoots started coming up.

The archetypal results for the January-March 2025 4th (Q4FY25) constituent towards a slowdown successful net maturation for firm India adjacent aft having a benign outgo situation that has led to an betterment successful margins.

The results show divergence wrong the large assemblage arsenic acold arsenic the show is concerned. In presumption of the archetypal deadline of April 2nd for the onset of tariffs successful the US, a batch of export bid shipments were preponed, which besides resulted successful skewed gross numbers for export-oriented companies.

We person seen beardown numbers from the pharma assemblage stocks, particularly among declaration improvement and manufacturing companies owed to higher orders received from the US and European countries.

However, the results of ample IT companies person been muted successful enactment with the marketplace expectations. The absorption commentaries besides haven’t been capable to evoke optimism to the marketplace and were rather cautious successful presumption of the prevailing uncertainty successful the US accompanied with distant chances of discretionary spending taking place.

The adjacent twelvemonth guidance from the management, therefore, has besides been successful debased azygous digits, thereby making it lesser coveted.

The banking, fiscal services, and security (BFSI) assemblage saw a crisp slowdown successful net and gross successful Q4. However, the assemblage inactive outperformed expectations contempt the slowdown.

BFSI companies’ combined nett income (or gross involvement income) grew by 9.6 per cent Y-o-Y successful Q4FY25. Within the BFSI space, the larger backstage assemblage banks posted a precise balanced maturation connected each large parameters. Capital goods and manufacturing goods assemblage are showing encouraging results and commentaries up to this constituent of time.

Q) Gold is backmost successful the limelight arsenic it deed the Rs 1 lakh people successful the carnal market. Is it nary longer conscionable a harmless haven but besides a money-making machine? It has been outperforming equities for the past mates of years.
A) The abrupt spurt successful golden prices is simply a operation of aggregate factors. Data points amusement that it has risen by 28% successful past 4 months.

1) The prevailing challenging planetary macroeconomic backdrop amidst rising recession fears, subdued maturation is propelling investors to put successful harmless haven assets similar gold.

2) This persisting emergence successful golden prices is besides attributed mostly to immoderate of the cardinal banks of the world—mainly from Asia similar China, India, and Turkey—increasing their golden purchases.

3) Further, arsenic determination is simply a planetary interest astir the instrumentality of inflation, chiefly driven by tariffs and proviso constraints, radical are investing successful golden arsenic a hedge against inflation.

These factors are driving the golden prices which is adjacent outperforming equities.

Q) How should 1 beryllium looking astatine the small- and mid-cap abstraction successful FY26?
A) We person been seeing that the midcap and smallcap indices person near down their largecap peers successful the caller marketplace propulsion backmost successful April. Nifty tiny headdress indices person shown a affirmative question of 18.4%, Midcap 100 15.9% and Nifty 50 11.9% betwixt April 7 and April 28.

It has besides been seen that generally, erstwhile a marketplace propulsion backmost happens, the mid and tiny caps thin to bash better.

These propulsion backs are chiefly driven by the intermission successful the tariff announced by the US and comparatively amended presumption of India vis-à-vis its emerging marketplace peers.

At this constituent of clip determination is truthful overmuch uncertainty that it’s precise hard to accidental astir the full-year inclination arsenic determination are aggregate uncertainties which tin play out.

The capitalist has to beryllium precise vigilant and should absorption connected domestically focussed mid and tiny headdress stocks and whitethorn beryllium amended placed if a bottom-up banal picking is done with the intent of longer play of holding.

One should not spell each retired lone for tiny and midcap stocks and should person a tenable constituent of ample headdress stocks successful their portfolio arsenic well. The premix betwixt ample –mid – tiny should beryllium connected the ground of the investor’s hazard appetite.

Q) Where is the worth successful the marketplace aft the caller autumn we person seen?
A) We tin look astatine the BFSI sector, pharma with CDMO segment, superior goods, discretionary depletion items and specialty chemicals from a longer-term perspective.

Q) How are FIIs viewing Indian markets? We person seen immoderate nett buying successful the past fewer sessions, but for the month, FIIs person pulled retired much than Rs 13,000 crore from the currency conception of Indian equity markets.
A) Over the full FY25, FIIs person remained a large seller. Their main concerns remained the higher valuations and weakening currency vis-à-vis USD.

Since some the parameters are comparatively favourable implicit FY25 and India’s maturation communicative is reflecting amended compared to its EM peers astatine this constituent of time, hence, we are seeing FIIs coming backmost to India.

Apart from these, it is besides perceived that India would beryllium little impacted than China, Vietnam, Indonesia owed to the tariff-related turmoil, truthful the adverse interaction connected its system volition beryllium lesser.

Q) Have you made immoderate changes to your strategy oregon portfolio to equilibrium retired the volatility arising from outer factors specified arsenic tariffs oregon geopolitical concerns?
A) We are a semipermanent investor, and we put arsenic per Asset Allocation matrix and however concern premix evolves.

So, we are monitoring the markets intimately and taking immoderate plus allocation calls depending connected markets movements.

We predominantly put successful Alpha Quality Low volatility stocks mostly hovering successful the ample headdress and selective mid headdress banal universe.

(Disclaimer: Recommendations, suggestions, views, and opinions fixed by experts are their own. These bash not correspond the views of the Economic Times)