Buoyed by steady buying by domestic and offshore investors, the Indian equity market is setting new highs despite a few disappointments on the macro-economic and corporate earnings front. One of the major contributors to this vertical trajectory has been the small investors from Tier II and Tier III cities, who have finally warmed up to the equity cult through systematic investment plans (SIPs). Gushed with liquidity, major indices like SENSEX, NIFTY 50, BSE Midcap and BSE SmallCap are trading at PE multiples of over 22, 24, 31 and 60, respectively. With valuation reaching such historical highs, a 10–20 percent correction triggered by domestic or global geopolitical event (s) cannot be ruled out.
As a large number of retail investors are yet to experience any major market corrections, here are some dos and donts for managing equity investments in the current market scenario.
