Ladies! It's time to sell your diamonds and buy gold, says a strategy report from Nomura. Of course, what Nomura's recommending is a basket of gold stocks and that's a somewhat cumbersome  option for Indian investors.

Back home, most investment experts disagree. Pradip Shah, managing director, IndOcean, feels that although gold has done reasonably well, it doesn't really create too much value in the long run. Agrees Motilal Oswal, chairman, Motilal Oswal, "Gold is a passive investment and doesn't give returns in the form of dividends."  Rashesh Shah, chairman, Edelweiss, too feels  it's unlikely that gold prices will rise too much  in a weak economy because demand is primarily consumption-led.

Instead, and surprisingly, they believe it's time to start putting some money into the equity market. Consensus earnings for the Bombay Stock Exchange Sensex for 2009-10 are at around Rs 1,036 � implying  that the market, at current levels of around 10,000, is trading at just under 10 times forward. It's possible that earnings will grow slower than 10 per cent, and so there could be a downside to the market. But India's price-earnings multiple, relative to other emerging markets, is down a third from what it was at the start of the year, which makes the case for buying equities � for the long term �  stronger.

Rashesh Shah of Edelweiss believes it's a good time to make a start, perhaps through an index fund or even systematic investment plans, but adds that  investors must hold on for at least three years. "Most of the bad news seems to be in the price," he says.

Adds Nilesh Shah, deputy MD at ICICI [Get Quote] Prudential AMC, "2008 may have been a bad year for equities but the allocation to this asset class should be maintained." 

Motilal Oswal also believes in the equity story though he too stressed the point that for wealth to be created could take more than wealth over three to four years.

All the same, ICICI Prudential AMC's Nilesh Shah, believes gold could provide a hedge against near-term uncertainties. Moreover, he says, demand from wealthy individuals in China and Japan may just result in some upside from current levels of around $835 per ounce.

All of them are, however, upbeat on debt schemes. Explains Nilesh Shah, "With corporate spreads still 250 to 300 basis points above the ten-year benchmark, income funds are likely to outperform bank fixed deposits. Banks are currently offering anywhere between 10 and 10.5 per cent for three-year money, which on a post-tax basis, assuming a tax rate of 30 per cent, works out to 7-7.4 per cent.

That's why  Rashesh Shah is recommending high-grade corporate bonds. "While the interest on bonds is also taxable, with interest rates coming off, there is a chance of capital appreciation," he says, adding that while gilts may be safe, right now they may not fetch very attractive yields.

No one's too keen on Fixed Maturity Plans, even though these may be more tax-efficient that bank deposits (because of indexation benefits) and offer better returns (since the money in invested in corporate paper). Pradip Shah feels it may be better to stay away from FMPs for the time being because mutual funds haven't been as careful as they should have while investing these corpuses.

Another space that everyone  believes is a clear no-no is real estate. Says Pradip Shah, "There needs to be a massive, across-the-board, price correction before one could start looking at real estate." Adds Edelweiss' Rashesh Shah, "I  would wait for another 25 per cent  fall in prices before buying."

Nilesh Shah, too, is clear that prices need to come off sharply because the valuations begin to look attractive. "Unless one is looking at a distress sale, I would be cautious," he says.