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The market has now seen a lengthy bout of both price and time correction. What is your in-house asset allocation model showing, and how do you interpret the scenario?Our in-house asset allocation model has three main pillars: valuations, sentiment, and earning... The market has now seen a lengthy bout of both price and time correction. What is your in-house asset allocation model showing, and how do you interpret the scenario?Our in-house asset allocation model has three main pillars: valuations, sentiment, and earnings outlook. After Covid, we had a perfect tailwind for equities, with all three parameters positive. But starting at the beginning of 2024, the framework began throwing up red flags all over the place. First, valuations began moving to near-unprecedented levels. On almost every single metric, valuations were extremely expensive. Now, from an asset allocation perspective, just looking at valuations is not enough, because markets can remain expensive longer than one might think, and vice versa. That is where the sentiment part comes into the picture. We have an in-house sentiment index that tracks a wide variety of factors. It tracks retail investor behaviour, Initial Public Offerings (IPOs), flows, and so on. We put it all together into a simple equity sentiment index with values ranging from -1 to +1. And in the early to mid-part of 2024, that value went up above +0.8. Now, these are normally levels we mark in red, indicating that investors are extremely complacent about equity risks. There is an inverse correlation between the sentiment index value and the next 12-month returns in Nifty. So, the sentiment part was also raising a red flag.The last part, the near-term earnings outlook, the post-Covid base effect had completely worn out. Over time, we were seeing more downgrades than upgrades, which effectively meant people were getting too excited. We couldn’t really see that kind of exuberance in the economy. And so, all three pillars essentially raised a red flag.Our framework moved to one of its lowest equity allocations in 2024, recommending just 20% exposure to equities. It was an extremely cautious stance. Today, it may not seem so radical, but at the time—when market euphoria was at its peak—it was a completely opposing view. That’s precisely why we rely on such frameworks: they are driven by data, not by what anyone thinks.Now, when I think about it, whatever happened in 2025 didn’t come as a surprise. Sometime in 2025, once the markets had corrected quite a bit, the equity allocation moved to 60%, a neutral allocation moved to 60%, a neutral allocation for us. Sentiment, which had risen to +0.8, fell to zero, suggesting the sentiment froth also came off. In earnings, while we were not seeing great upgrades, the extent of downgrades started coming off.So that 60% equity allocation continues even today. Both valuations and sentiment have cooled. Are we at truly mouthwatering levels for equities? The answer is no, because valuations have moved from being very expensive to average, while sentiment has shifted from extremely