Vetri Subramaniam, group president and head-equity at UTI Asset Management Company, on Tuesday, said that the best strategy currently is to not get carried away just because the stock prices are displaying momentum. He also mentioned that it is not the time to raise allocation to equities.

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He said, “The best strategy is to just keep calm. This is not a time for anybody to get excited because stock prices are displaying momentum. It's also not a time to be taking up asset allocation when valuation is in a fairly rich territory.”

“In fact, it's perhaps a good time for people to look at their asset allocation related to their financial goals. And I suspect that people who have taken that opportunity during the crisis, perhaps to increase allocations, could actually be looking at a reverse situation today, whereby perhaps equity allocations are higher than what they need, to keep it in line with their overall financial goals,” said Subramaniam, in an interview to CNBC-TV18.

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“So, there’s actually a case to perhaps even reduce equity allocation for some investors but I would say that’s fewer and far between those who really managed to increase their allocation at the lows, for most people I would say, just stick to your plans, just stick with your SIPs. It’s certainly not a time to raise your allocation to equities just because it seems so exciting. That’s the wrong thing to do,” Subramaniam explained.

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He further said, “It’s always the case that when valuations are cheap, it is accompanied with uncertainty, doubt and fear, similarly when valuations are rich, it is very often accompanied with supportive news or the economic data looks good, suddenly we have 20-20 vision in what the earnings will be in FY23 and FY24, it’s important to remember that one-and-a-half years ago, people didn’t know what the future looked like two days out, so that’s really the distinction that I would make that yes, perhaps everything looks bright today, but stick to the asset allocation, don’t get carried away.”

For the entire interview, watch the video

(Edited by : Dipika Ghosh)