Time for asset rotation.

The greatest irony of the Indian economy is the regulatory gap. On the one hand, RBI and SEBI maintain strict vigil over the banking system & financial markets. The regulation is comparable with the best in the world. On the other hand, we have gold and real estate which are largely unregulated markets. But, they are simply too huge to remain outside regulation. The government recognizes this anomaly. The regulatory gap is set to gradually narrow. The process of bringing the two under a strong, consumer friendly regulatory regime has begun. While the government is moving slowly on gold, it is setting an active pace for real estate transformation. The real estate bill will soon be before parliament. Gold is being moved towards a more accountable system of trade, holding & disclosure. This is no ordinary change. If the government walks the talk on these two areas, the sums of capital available to economic development will increase significantly. Investors will start viewing these investments differently as their attractiveness is set to dip. Real estate will become a space where speculative purchases will reduce and this could depress markets significantly. Regulation will definitely slow things down. This should shift investor focus further towards equity. If domestic capital finds it lucrative to invest in the economy, our market’s dependence on foreign capital will reduce. Sensible investors should wait for the contours of regulation to emerge before they invest further into gold and real estate. In the interim, a reviving economy makes equity a more sensible investment choice.

If you are not willing to risk the unusual, you will have to settle for the ordinary . Jim Rohn.



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