Interview: Inflation and high interest rates are here to stay; get used to them: Saibal Ghosh, CIO, Aegon Life Insurance

After witnessing heady growth in the last close to three years, the Indian equity market could be headed for a volatile year, with several factors likely to affect its performance.

Saibal Ghosh, Chief Investment Officer at Aegon Life Insurance, feels that India could witness slower earnings growth in 2023. Moreover, China opening up this year could result in fresher allocations by foreign institutional investors (FII) moving away from India, which has higher valuations.

Irrespective of market conditions, he believes, younger investors must make larger allocations – 100 minus their age – towards equities. In a high-growth, high-inflation country like India, two asset classes – equity and real estate – should form a key part of your portfolio, he says. But given the rising interest rates in the economy, which will continue to be elevated for some time, it is a good time to invest in fixed-income instruments, Ghosh says. He recommends investing in bond and government securities (G-sec) funds in the latter half of this higher interest cycle. These funds will help make capital gains when rates start falling again.