View: A mix of large and midcap stocks would be the ideal equity investment strategy for 2022

View: A mix of large and midcap stocks would be the ideal equity investment strategy for 2022

Though one calendar quarter is too short a period to change one’s investment strategy, I have a habit of reviewing my assessment of markets and investment strategy every quarter. In my last Outlook and strategy review, I had highlighted that given the present circumstances, the outlook for the next year is pretty simple and straightforward. The return expectations of the investors may be moderate and focus may remain on capital preservation. I therefore continued with my standard asset allocation, and decided not to trade actively.

In my latest review of market outlook and investment strategy I noted the following:

(a)   The economic recovery post pandemic continues to be uneven. The larger unorganized sector continues to lag, while the formal sector is progressing well. The tax collections are therefore buoyant, and fiscal pressure is not constricting the public sector spending. The overall consumer demand growth however remains poor. The overall economic growth estimates have therefore been downgraded moderately.

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(b)   The consumer demand is also impacted by stagflation like conditions, as higher energy and food bills have eroded the discretionary spending power of a larger section of population. The real income of consumers is not growing or even de-growing in