How to build a safe portfolio when the market is at a high

The equity market is nearing an all-time high. And a number of factors have contributed to this phenomenon. Foremost among them may likely be the peaking out of the second wave of the pandemic, coupled with the government’s vaccination program. In addition to this, looking beyond domestic reasons, we find that the Federal Reserve and the US government both point to positive cues in the context of spending.

All these factors have pushed up the performance of cyclical stocks, and have driven industrials, commodities, and BFSI to do well in the markets. But alongside this scenario, many investors are left wondering how this will play out a couple of years down the line. In this context, experts suggest that while there may be some corrections in the coming months, the market is not expected to plummet radically. 

Also, with capex seeing a revival in India after a significant lull, infrastructure spending from the government is expected to increase in the months going forward. Real estate is also likely to pick up in the near future. And the 3 key engines of investment, namely the government, private corporate and household sector may boom in the next couple of years.

There is still an element of skepticism in the market, which is perhaps why the valuations remain attractive. But given how we are poised in a sweet spot, where capex is seeing a rise, mid and small caps are doing well, and most sectors are ready to pick up after the pandemic lull, building a safe portfolio when the market is high may not be very challenging. The savvy investor will continue to look at the fundamentals and keep an eye on the domestic -as well as the global - market conditions before creating or altering their portfolio.