For the first time, Sensex crossed the 35,000 mark and closed well above this psychological barrier (ie at 35,082). And this rally has rewarded equity investors handsomely. For example, equity as an asset class has delivered annualised return of 18.18 per cent in the past five years. We have used the category average performance of diversified multi cap funds for arriving at equity returns. More importantly, the rally has picked up speed in recent past and delivered a return of 33.83 per cent during the past year.

Despite the huge rally in the last one year, experts say that there is no need to get bearish on the market. "No need to become bearish now. Market has rallied on the hope of earnings recovery and the same is expected to happen in 2018. However, investors need to be cautious, because the macroeconomic situation may deteriorate and this may results in short- term corrections", says Anand Shah, Deputy CEO & CIO, BNP Paribas MF. Earnings revival will happen in 2018 because the negative impacts of demonetisation, GST implementation, etc have already faded.

And as visible from the table, equity has delivered much better return than other asset classes in all time periods. That means the portfolio weight of equity might have gone up significantly. So they need to bring it down to their pre-set asset allocation levels. This can be done either by shifting from equity to other asset classes or diverting new investments to other asset classes.