Election over. Results are out. A clear majority win by NDA and market touching new high. Is this the scenario we were waiting to invest?

Election results impact the market for short-term but in the long-term, markets are a factor of corporate earnings. Historically, whenever trailing price to earnings ratio moves above the range of 28, it is seen that market correction is in the offing. At present, Nifty PE is above 30.

We believe equity investors should continue investing in equity mutual funds through SIP & STP to capture market volatility and average out the cost of investing. Investing through a systematic route will ensure consistency in the portfolio strategy irrespective of short-term view.

As for debt mutual funds, debt market looks very attractive where the Yield To Maturity (YTM) is more than 10% in most of the debt mutual funds.

Investors should not miss the opportunity of investing in debt mutual funds, with a 3-year time horizon. Also, credit risk funds as a category look attractive for investment.

Investors should stick to their asset allocation depending upon risk appetite, investment horizon, and financial goals. Gains from equity mutual funds can be moved to debt mutual funds to rebalance the portfolio and arrive at their pre-defined asset allocation ratio.