1. Another round of rate cut is in offing in the market and thus as an alternative to investment in the stocks one can also consider investments in income funds as these will be the biggest beneficiaries in rate cut scenario. Income funds will give good returns with a time horizon of one year to two years.

2. To make the things easier to understand one can see this example where one will be able to appreciate correlation between bond prices and interest rates. Let us assume that the interest rate was 9 per cent and since interest rate is falling and lets say that the same has fallen to 8 per cent in the market. Now bond with a coupon of 9% on a face value of Rs 100 will continue to earn the same interest even when interest rates in the market fall down. This will lead to more interest for bond paying 9% cent coupon and thus it will go up in the market and the price of the bond will increase such that the new investor gets 8% on market value, on the day the new investor purchases the bond.

3. Another category in which one can invest in periods of recession is gold and one must allocate 10-15 percent of the portfolio for the same.