The market sentiment is bullish but valuations are high. Why fight against a trend, while staying bullish, just add an element of caution. When we use the word caution, we mean stay with quality and especially if one is increasing exposure in midcap at this point of time. There is enough evidence to show that owning quality stocks pays both in bullish and bearish markets conditions. In a bullish market, they tend to rise faster and when a bearish phase comes, they do lose weight like others but less as compared and have shown tendency to recover fast post a bearish phase. so stay bullish but be selective. But how to be selective, right from whether the company pays dividend to how it is debt situation, whether promoters have reduced the stake or not if yes than why, these are additional aspects to look at besides looking at the matrix of ratios.
While it might be too early to call or to some it might appear to be wish of which bears on the street would have, but the way the market breadth has panned out, there is probability of a selective correction taking place, which is essentially led by the profit booking. At this time if one is looking to increase exposure, it would be better that they should look for stocks where there are some improvements in the business operating matrix that tend to weather the storm better. These selected stocks depict a strong upward trajectory in their overall average score which is based on five key pillars i.e. earnings, fundamentals, relative valuation, risk and price momentum. This implies that there has been a significant improvement in their market outlook in the given time frame.