It's party time on 'island of growth'

MUMBAI: After almost three years, the sensex has again touched the 21k-level.
A sense of deja vu? Hardly. As for market participants, they are getting ready for a long party in the next few years, as many of them expect India to be "an island of growth" and foreign investors would "continue flocking to our shores". As for individual investors, they are feeling a bit uneasy—something they constantly face every time the market scales psychologically-significant levels.
"Long-term investors can remain invested and not get worried about absolute levels of the sensex, as the peak PE and PBV valuations were much higher in January 2008," says Devendra Nevgi, CEO & Founder, Delta Global Partners. The sensex peak PE was 28.5 and PBV 6.9 in January 2008. (PBV—price by volume—valuations are used to illustrate high buying and selling interest.)
Nevgi is at least talking about valuations, but if you speak to other participants, you would be surprised how upbeat they are about the future of the market. They are not worried about global economic troubles, which are still refusing to go away; all they care for is India's growth potential and how foreign money is likely to keep flowing into the country in next few years.
The broking community feels that India alone looks like an island of growth and foreign money is likely to chase wherever growth is. The only dampner: Will too much money results in asset bubbles? But at the moment nobody has time for such serious economic debates.
According to financial planners, individuals should not commit the mistake of abandoning their original investment plan because the market is getting into an unknown territory. They advise investors to continue with their regular investment plans like systematic investment plan (SIP). The one thing (and it's a must) investors should do without fail is review their portfolio.
This is to make sure that their portfolio is not skewed towards equity, considering the rally in the market in the last two years. Known as rebalancing the portfolio as per the original asset allocation plan, this exercise would make sure that you also book profit on time.
As for the warning signs, Nevgi wants investors to look out for "global cue, in terms of foreign inflow and economic growth and corporate earnings." In fact, these are the two factors that would determine the course of market in the coming days.