Trading just shy away from its all-time high, lately the equity market is on a joyride. Though a recent short and shallow correction has pulled down the indices, most equity analysts are of the view that the market is trading at expensive valuations. The market is indeed expensive, at least at the index level as well as in specific sectors like banking and consumer goods, for instance. At the current forward price-to-earnings multiples, not only the market is trading well above its historical average but currently Indian stock market is also one of the most expensive markets in the world.
The current exuberance and irrational prices are expected to remain on higher side of the curve and the market is expected to remain in the present expensive trading zone till the end of year, unless some unforeseen global factors spoil the party. Last year, the market rose by 17 per cent; this year so far it has appreciated by about 19 per cent. Given the phenomenal rise, the question that most investors must be asking is: Should they continue to park their excess money in stocks? Or is it wise to wait for a meaningful correction?
