Domestic investors can expect to have better times, both in debt as well as in equity spaces on the back of hopes of interest rate cuts by the monetary authority along with better earnings by corporates next year, top officials of Kotak Mutual Fund said here on Wednesday.

As per the fund managers, investors should stay invested in the capital market as it is likely to be attractive in the next calendar year.

“Investors should stay invested in the debt funds in 2013 as there are expectations of rate cuts in the near future,” Kotak MF senior vice-president and head of fixed income and products Lakshmi Iyer said.

She also said the benchmark 10-year G-Sec is likely to soften going ahead.

The 10 year G-Sec (government securities) is trading around 8.16 per cent as of now and we hope that the yield will move in the lower end, she added.

Similarly, the fund house also said earnings are likely to be better in the coming year.

“We have estimated an earnings growth at 7-8 per cent in 2012. But in 2013, we hope to have earnings growth of 11-12 per cent,” said Harsha Upadhyaya, senior vice-president and head of equity of Kotal MF.

He also said rate-sensitive sectors, like auto and banks, sectors with probability of change in capital structure, among others, are likely to do better in the coming year.