MF investment strategy: Be wary of rich valuations

Mutual fund investors are in the crosshairs due to the widespread offloading of stocks by foreign institutional investors (FIIs), expensive valuations of the Indian markets compared to global peers, and nervousness ahead of the Lok Sabha election results.

-  NIKITA VASHISHT

The benchmark S&P BSE Sensex has slipped nearly 1,400 points (1.8 per cent) month-todate (MTD) in May, while the Nifty50 index has declined 387 points (1.67 per cent) during the period. The S&P BSE MidCap index has shed 1 per cent thus far in May, while the S&P BSE SmallCap index slipped 2.43 per cent. While stock market investors, analysts said, should brace for volatility ahead and remain stock-specific, mutual fund investors, they suggest, may consider a staggered investment approach at the current market levels.

Stock market and mutual fund investors, they added, need to be wary of rich valuations in equity markets at this point, and should acknowledge the potential risks ahead.