Vetri Subramaniam, head of equity at UTI Asset Management Company, said the market rally has become broad-based compared to a month ago but year-to-date it has been in a narrow market.

"The house has reduced equity allocation in their multi-asset hybrid fund on valuation concerns. Valuations have always been a challenge. When the market is pricey, one should be careful about return expectations from the asset class," Subramaniam told CNBC-TV18 on Friday.

"The market has been climbing the wall of worry quite well for the last one year and it would likely persist to do so," he said in an interview.

When asked what could trigger a correction in the market, Subramaniam said, "One cannot point out specific factors that would trigger that because the nature of the beast is such that often things that we discuss the most get discounted into the price, while the unexpected things end up doing the damage."

“If you do believe that valuations do give you a good reasonable road map of how to deal with risk then effectively what valuations are telling you is not really being adequately compensated in terms of valuations for taking the risk in equities at this point of time or at least being hyper aggressive of equities at this point of time,” he said.

With regards to pharma, he said, "They are incremental positive on pharma space. However, one must pick and choose stocks because the winners may not be the same that have done well in the past."

According to him, big chunk of profits for pharma companies is coming from India and emerging market and there is strong domestic franchise for pharma companies.