How to invest in June: Equity SIPs, short-term debt, and balanced funds

Business Standard

10 hours ago

As the global economy enters a foggy phase of uncertainty, India continues to show resilience. ICICI Prudential's latest Monthly Market Outlook calls for a "middle-of-the-road" investment strategy that balances optimism with caution. While global growth faces risks from rising tariffs, geopolitical instability, and ballooning US debt, India's domestic consumption story remains intact—backed by policy tailwinds, infrastructure momentum, and formalization.
Equity: Stay Invested, But Be Selective
Indian equity markets have rallied in recent months, with sectors like realty, capital goods, and infrastructure seeing double-digit gains. Real estate, in particular, surged 23% in May, buoyed by robust earnings, RBI rate cuts, and strong demand
However, valuations—especially in mid- and small-caps—remain high. ICICI Prudential's Equity Valuation Index places markets in a neutral zone, not cheap enough to go all-in, but not overheated enough to exit. Hence, fresh equity allocations should be done staggered and with a large-cap bias.
"We remain constructive on 2-year and lower duration products with expectation of yield curve steepening around these points. We are cautious on 5-year and above duration as we expect a V-shaped recovery in the economy," said the report.
Equity Playbook:
For long-term growth: Continue SIPs in thematic and business cycle funds
Prefer stability? Choose ICICI Prudential Bluechip Fund or Minimum Variance Fund for large-cap exposure.
Worried about volatility? Hybrid options like Balanced Advantage Fund or Multi-Asset Fund provide equity upside with safety nets.
Debt: Mind the Duration Risk
India's economy is rebounding, with GDP growth rebounding to 6.4% and core inflation rising from its bottom, signaling a mid-cycle recovery. However, the bond market still reflects caution due to past liquidity tightening. With RBI now cutting rates and boosting liquidity, short-duration debt products are better placed than longer-duration ones, where yield curves may steepen.
" We remain constructive on 2-year and lower duration products with expectation of yield curve steepening around these points. We are cautious on 5-year and above duration as we expect a V-
shaped recovery in the economy," said the report.
Debt Strategy:
For safety and short-term income (3–12 months): Opt for Liquid, Money Market, or Ultra Short-Term Funds.
For moderate duration (1–3 years): Look at Short-Term Funds, Corporate Bond Funds, or Banking & PSU Funds.
India's long-term story remains structurally intact. But in the short term, investors should resist aggressive calls and instead follow a "B.A.D.C." strategy as recommended in the report:
Broad equity exposure through business cycle and thematic funds
Asset allocation via hybrid/multi-asset schemes
Dynamic/flexible mandate funds for volatile phases
Capitalization preference towards large caps for new investments
Investor Checklist for June 2025:
Continue SIPs in diversified and large-cap equity funds
Allocate fresh money through hybrid or asset allocation routes
Keep debt exposure short in duration
Avoid lump-sum mid/small-cap exposure for now
Rebalance your portfolio—especially if equity allocations have swelled
Why India Looks Strong:
Rising formalization: GST, UPI, e-invoicing are expanding the tax net.
Infrastructure boom: National highways, ports, rail capacity all on track for 2–3x expansion by FY2030.
Consumption upcycle: Spending shifting toward premium and discretionary goods; income tax relief up to ₹12 lakh is boosting consumption.
Healthy household savings: Backed by rising per capita income and stable inflation.
What to Watch:
Mid-cap & small-cap froth: These segments remain richly valued.
Slowing earnings growth: Corporate earnings are softening post-COVID cost advantages.
Election-related populism: State elections may prompt welfare splurges, pressuring fiscal prudence.