The markets are not overvalued currently and in the last one year, both midcaps and small caps have become cheaper and are now more fairly valued. Within large caps, baring the ten mega-caps, the market has become cheaper. Baring the PSU pack, the rest of the market is fairly valued and it is better to invest systematically.

The time to nibble has come but not a time to take a big call on equities. "Investing through SIP/STP means you are comfortable nibbling. One can look at nibbling into small and midcaps because they have become much cheaper.

The house is very positive on banks compared to housing finance companies and non-banking financial companies, especially banks with good CASA franchise. Banks had a bad period for a long period of time - seven years and so no reason that the outperformance should get over three-six month period.

Domestic factors, particularly general elections, investors to not get swayed by the volatility. They need to remain disciplined and continue the focus on asset allocation with regular re-balancing. Longer term orientation is critical to achieving their financial goals.