"Equities tend to do well in the earlier part of the inflation cycle as pricing power comes in the hands of companies. But in the later part, higher inflation leads to higher rates. As interest rates move up, discounting happens at a higher rate, so equity valuations tend to move down," Gaurav Awasthi, Senior EVP, IIFL Wealth.
Real Estate Investment Trusts (REITs): Investors in need of regular cashflows may invest in REITs. "They have the potential to offer inflation-hedged returns over the long term. REITs can constitute 10-20% of an investor's debt portfolio. One can expect 7-9% pre-tax return from them, he said.