Profit booking: Choose small tweaks in equity allocation over drastic shift

Do not leave the money idle, redeploy it in high-quality fixed-income instruments

In the wake of the stock markets touching new highs recently, many investors are keen to book profits. Concerns around high valuations and the re-emergence of the Covid-19 virus are fuelling this trend. Investors need to have an effective strategy for profit booking.

“Deciding when to book profits depends on a multitude of factors, such as investment objectives, risk appetite, current market dynamics, and the nature of the assets held,” says Vijay Kuppa, chief executive officer, InCred Money.

High valuations

At 24.6, the trailing 12th-month price-to-earnings (P/E)) ratio of the Nifty 50 is almost at par with its five-year average