What is the best option mutual fund or direct equity for investing in indian market and to get moderate return

It is basically about investing, for a moderate risk taking investor like me is it advisable to go for mutual funds or direct equity in such a volatile indian market? For a time frame of 2 years and with approximate annual investment of 200000 can I expect a return of 20% per annum for nest 2 years?

20% per annum with moderate risk and that too in a two year period? I would say your expectation is high expectation compared against the short period you have chosen.

Stock markets are volatile, they give high returns (like 2003) and some times negative as well. You should give a longer period for your money to work and give you reasonably good return. Punting is different from investing. What you are looking for is punting.

Now, if you have the experience to analyse and pick the winners go for direct stock purchase. If you don't have the skills, or you lack time to monitor various issues on regular basis, pick a mutual fund according to your expectation and wait for the fund manager to produce the results. An intermediate option is PMS. But for PMS governance issues are there.

You can check with few experienced financial consultants as well.

Good luck.

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if u r new then chose mutual fund thru systematic investment plan

MINDX is a pure India fund, but don't count on 20% per annum.

# If you are new, better invest through mutual funds.
# Better if you spread full amount of Rs.200,000/- in 4 mutual funds.
# Rate of return cannot be predicted, but you are likely to get 10 -15% as per present trend (though last 1 - 2 years mutual funds gave more returns.
# Which mutual fund - please open site : http://www.mutualfundsindia.com/
and compare the performance of mutual funds for last 1 - 2 years. You will be able to identify mutualfunds according to youe risk aptitude.
# Here is list of 8 topper mutual funds:
Open Ended Toppers as on Aug 1, 2006
Scheme Name Category 1 yr. Rtrn.(%)
Sundaram Select Midcap - Divid Diversified Equity 57.99
Tata Index Fund - Nifty Plan - Index 44.6
Franklin India Index Tax Fund Tax Plan 35.73
SBI Magnum Sector Umbrella - I Sector 43.68
Can Balanced II Balanced 46.27
LIC MF Unit Linked Insurance s Debt 29.12
UTI G-Sec Fund - STP - Growth Gilt 5.39
Reliance Liquid Fund - TP - IP Liquid / MMMF 8.81
Best of luck.