Balakrishnan Kunnambath, MD and global market manager (Indian Subcontinent), SG Private Banking (Asia Pacific), in a conversation with Rajesh Abraham, talks about rising stock valuations in global and Indian markets, and sectors to keep off. Excerpts:Where do you see the markets headed globally and in India?The Sensex currently trades at valuations of 19.2 times FY08 earnings and 16.3 times FY09 earnings. These valuations are at the upper end of the band, especially given the slowdown possibility. It clearly calls for caution at these levels. Our house view continues to remain cautious on the overall market as the valuations are in the expensive zone and growth is tapering off. However, strong liquidity will continue to chase risky assets and drive valuations beyond fundamental fair valuations.Our view would be to avoid sectors dependent on interest rates and currency like automobiles, consumer durables and IT. However, post the Fed cut, the interest rate scenario has softened and the banking sector could be upgraded to over weight from under weight earlier. Currency dependent sectors like IT and textiles, however, continue to look negative. These stocks have under performed and are likely to continue underperforming given the weak US dollar scenario. The sectors which are likely to do well are pipes, telecom, banking and capital goods.In your experience, what is the behavioral trend that you find HNIs have towards investing in the markets? Do you think they need to have a cautious approach, since the Sensex is crossing the 17000 mark?SG Private Banking India strongly propagates an asset allocation view. Asset allocation includes not only equity stocks and mutual funds, but other assets like debt, structured products, and alternative investments, amongst others. At a time when valuations look expensive, our view might be to take a tactical underweight position on equities in the overall model. But there is a hesitation from taking drastic cash calls on the equity side as we still believe India will remain one of the high growing spots in the globe.