Market in middle overs, investors should focus on discipline and strategy: Report

MUMBAI: The current consolidation phase in the market is like middle overs in cricket -- discipline and strategy -- where investors should not take risks but build the portfolio for a rally, a report said on Tuesday.

Investors should not increase equity portfolio allocation, and maintain 65 per cent allocation in large caps. As much as 35 per cent can be invested in mid- and small-caps, suggested Motilal Oswal Private Wealth in its report.

For investors currently under-allocated to equities, they could consider lump-sum investments in the hybrid category, and a staggered investment approach through SIPs or STPs would be more prudent for pure equity-oriented categories, the report added.

Due to limited room for further capital gains, softening of the yields should be used as an opportunity to gradually reduce the exposure in long-term bonds maturing in 10 to 15 years.

As the yield curve steepened due to RBI policy easing and liquidity interventions, investors may be "overweight on accrual strategies across the credit spectrum by allocating to private credit strategies, InvITs and select NCDs," the report said. Arbitrage funds and income-plus-arbitrage FoF are tax-efficient fixed-income alternatives, it said.