Today morning the Sensex hit 38,000 points (Nifty 11479 pts) during the last two months the stock market index has moved up by over 2000 pts while most investors and mutual funds have not benefitted. This is so because the stocks that contributed to this rise are only a handful. The extra ordinary rise is coming at a time when the macro factors are against us, like Crude, which has been going up (adverse to India) along with the general rise in Interest Rates (adverse to India). While all these factors are adverse, why is the markets moving up rapidly?
Equity markets move on demand/supply; not necessarily on sound valuation always. While the long-term averages may still be rational, in the short term there are times when the markets can behave 'irrationally exuberant', as it seems to be now.
It is time to be cautious of equity. However, since volatility is likely to increase in the coming months. Increase your SIP (Systematic Investments) but rebalance your portfolio if you have been in equity markets for the last 5 years. I am sure you have good profits that you can protect in case the markets were to get into a correction mode… but continue your SIPs.
In stock markets it pays to be a CONTRARIAN.