Sensex sniffs 20,000. What should you do next?

When the music is on, can you get off the dance floor?
The Sensex has rallied nearly 2,000 points in 13 days of trading this month, one of the fastest gains ever for the index, as foreign investors poured around $4 billion, or about Rs18,000 crore.
On Monday, the Sensex rose 311 points to close at 19,906.10 — a whisker away from 20,000 and within shooting distance of the all-time closing high of 20,873.33. Foreign investors pumped in Rs74,935 crore, or $16 billion this year, driving the upturn.
Experts said there is more leg left in the equities rally, but suggest it’s time to book some profit if you are already invested in shares. “We remain positive on equity and see more than 10% upside by March-April. But we are advising clients to book some profit at least,” said Sutapa Banerjee, head of private wealth at Ambit Capital.
Which begs the question: where does one invest in such times?
Safe-haven asset gold has been surging to its peak. It has risen only 0.77% in September, but over the past 12 months, it’s up 21%.     Turn to p12

On last Wednesday, the price of the precious metal hit a peak of Rs19,185 in Mumbai. On Monday, it lost Rs45 over Friday’s close to end at Rs19,090.
Although gold may have peaked recently, those looking to enter it can do so in a staggered manner, with the possibility of 8-10% upside, said one expert on the condition of anonymity.
“Those with an aggressive risk profile can still allocate 80% of their investments into equities. The conservative ones can look at a 30% allocation,” said Swapnil Pawar, head of HNI Solutions at Karvy Private Wealth.
On the other hand, experts said, fixed deposits and mutual funds continue to offer a safer and good alternative in the short-term. While debt products can be used to safely park money, experts advise putting it in products with a shorter duration.
“Interest rates are going up. We advise sticking to products with a 2-3 month time period until the expected round of rate hikes by the Reserve Bank of India and banks in October-November,” said Sutapa Banerjee.
Money market, ultrashort term and short-term bond funds are places to park funds for short-term periods, experts said. These products give returns of between 4-6%. Those looking for safety and longer duration can also look at fixed maturity plans (FMPs).
“FMPs are a better product as they are giving 7-7.5% after tax for one year or more. Monthly income plans (MIPs) are also selling like hotcakes as they are the flavour of the season,” said Suresh Sadagoppan, principal financial planner at Ladder 7 Financial Advisories.
Paul D Souza, who runs Cuzzins Investment Services, said that’s because MIPs have an equity component of up to 20% (unlike FMPs, which are totally debt), they can give the kicker to one’s portfolio in these times.
And for those looking for a safer route to boosting their investment returns, there are always the systematic investment plans of mutual funds.