Things to do at 12,000

by Navnit Munav / BSSI

Since markets have run up sharply over the past few months, investors should take a relook at their asset allocation and focus on stocks that hold potential for outperformance.

The BSE Sensex has returned over 25 per cent year-to-date and is trading at an all time high. This is on the back of impressive returns of 42 per cent, 13 per cent and 73 per cent respectively, during the last three calendar years.

As the Sensex PE has expanded from 13.6 times in 2002 to almost 22 times (based on trailing earnings) presently, it would not be wrong to say that a one time re-rating of overall market is almost over.

The rally in the market has been very broad-based, encompassing several sectors against previous major bull market of 1999-2000, where it was concentrated in a handful of sectors. The rally has been driven by improved fundamentals of the economy and the corporate sector and powered by liquidity flow from both domestic as well as foreign investors.

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