I am glad if you are in early 20s and thinking of investments from such a young age. Since you are young and do not require your money for atleast 4 to5 years, large cap based equity funds should form the core of your investments. You could buy HDFC EQUITY OR HDFC TOP 200 OR RELIANCE VISION .Invest about 35 to 40 percent of the investible funds in these. Then go in for SBI Magnum contra fund. This is a contrarion fundwhich must form part of every portfolio. Take the growth option in all the funds .
The 3rd category should be mid cap funds. In atleast the next1 to 2 years, these funds will do very well, better than large caps. You must have DSP T.I.G.E.R., SBI MAGNUM GLOBAL, RELIANCE GROWTH AND Sundaram select mid cap funds in this sector. You will definitely get phenomenal returns. Mid caps have lots of volatility but do not get disheartened during down days. In fact add during the days corrections a lot. Infrastructure as a sector will do very well till 2010 atleast. In this, look at tata infrastructure, Pru infrastructure and Pru services industries funds.
At your age do not go for debt funds. Instead put that moneyin P.P.F. To safeguard some capital you could invest in HDFC Prudence, a balanced fund. Some money can be put in a M.I.P. fund which acts like a debt fund. To summarise1. large cap-Rs 1 lac2. mid cap-Rs 1 lac3. infrastructure, contra, prudence -Rs 1 lac in a 3 lac rs portfolio should be a reasonable distribution. As soon as you get 10 percent profits, take them out and invest in P.P.F. or M.I.P. funds. To give an idea, if the above sum was invested in 2005, today it is worth about 7 lac rupees or more as on date.