As the bull run continues in market, it is time to exercise caution, say experts

livemint.com:

continue their run on Dalal Street, retail investors have more reasons to cheer than one. Sceptics may say that the music may stop anytime, but the optimists argue that it is hard to stop dancing when the music is still on. Both benchmark indices have hit their lifetime highs in quick succession on numerous occasions in the past couple of months.

Consequently, benchmark indices have posted double-digit returns until Dec 22. BSE Sensex 30 spiked 16 percent between Jan 2 to Dec 22 when the market closed at 71,107. Nifty 50, too, demonstrated equally good performance and rose 17 percent until Dec 22 upon settling at 18,197.

As an investor, one might wonder if this bull run is sustainable, and if not – when exactly will the ‘party’ be finally over. Here we delve deep into this and explore what exactly should investors be doing amid this ongoing bull run. One expert opines that investors can explore the option of booking profit if a bull run has led to a higher value of equity far beyond the predetermined ratio.

Let us suppose an investor ‘X’ aimed to keep the equity portion of his portfolio under 60 percent. As a result of the bull run, if the equity portion has now surpassed 75 percent of his portfolio, then it is recommended to redeem 15 percent of the portfolio in order to do the rebalancing. “Investors can book profit if the asset allocation is skewed towards equity.