Book profit and stick to your asset allocation plan

MUMBAI: Strange as it may sound, but a BSE Sens*x on the rebound reminds most investors of the famous apple that helped Newton to formulate the theory of gravity. They are convinced that every milestone for the Sens*x means only one thing: It is bound to fall soon. No wonder there is a scramble for advice every time the market bellwether crosses a landmark. Should I book profit? Should I exit the market? Should I get back after a huge correction? Questions abound.

"I think it is more of a psychological need. They just want to hear you spin some new theory to calm them," says a wealth manager on the condition of anonymity. "I tell my old clients that it just doesn't matter and we would stick to our investment plan. But for new investors, I give them something that would make them feel better."

Sanjiv Shah, executive director , Benchmark Mutual Fund, a fund house that specializes in index-based schemes, also doesn't attach much importance to the magical figure of 20,000, which the Sens*x crossed with ample

Mahesh Patil, head - equity, domestic assets, Birla Sun Life Mutual Fund, also says that investors should remember that the outlook for the market is positive for the long term. "Sure, the valuations are expensive, but fundamentals and earnings are positive for medium to long term. There could be a correction, but it is always difficult to predict. That is why it is almost impossible to time the market. In short, if you have invested money with a long-term goal, stay invested," he says.

"We are not in the phase of 2008, where we had three to four years of bull market and there was irrational exuberance in the market. Be cautious and book some profit if you want, but remain positive for the long term."

As for the near term, expect a bit of volatility in the market. "We expect the index to expand by around 10% over the next year. However, we do observe that market participants have been booking profits," says Prateek Agrawal, head - equity, Bharti AXA Investment Managers. "One key sector that we expect to be a driver is banking. We also believe that metals and mining would do well considering that the economy is booming and infrastructure growth would propel these sectors. Realty and construction also would benefit from this boom," he adds. Source: ET