nifty p/e investment decision making graph.
The reader must be aware of ever since this blog was started i have been bringing this unique way of identifying nifty lvls for an investor.
subsequent to that as a trading alternative for medium term investors i had posted a technical analysis chart on the same.
my advance projections of nifty high of near 6400 and low of near 2340 by means of this must also be well known to the reader, the accuracy within 100-150 points is very well within acceptable limits.
(for the previous post pls refer http://valuetrading.blogspot.com/2008/10/fresh-nifty-pe-chart.html)
the entry line and exit line for a very long term investor are shown on the graph above.
rectangular blue boxes(alongwith blue circles on p/e) show that when p/bv and div yield come closer to each other or overlap or criss-cross each other, its time to begin investment for long term.
one such chance was in oct 2008, but if nifty is to fall again too much then some projections will have to be made.
the projections for oct low were based on mkt nifty eps expectations of 234 which is now trimmed down to currently expected eps of 210.50, which may further change depending on economic situation and companies results outcome. the low if occurs again now therefore works out tentatively to be between 2136-2250 assuming nifty eps between 200-210 and bear mkt low p/e 10.68. if the expected eps or p/e's drop further then i will have to work this calculation again. we will watch for the movement of nifty p/e toward the lower blue investment line if nifty starts falling too much again, accordingly the nifty bottoming and investment entry lvls will also be known.
abhay r somkuwar.
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Saturday, March 21, 2009
nifty p/e investment decision making graph...
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9 comments:
Dear Abhay,
I am regular visitor of yr blog and u r my respectable TA and u always ready to support to others,
i want to know where can i found yr recent pe chart. r u doing it yr self in excel if yes than pls send me that excel sheet to my id its a nishantderasari@yahoo.co.in
thanks and regards,
nishant
I agree to your views on the mkt using PE as a tool. There is a minor difference. U still believe we'll go down to 2200 appx. But, i believe bottom is in place, as the bottom was achieved too fast in oct, we might be going thru long time correction, till NIFTY EPS reaches 240-250 so that nifty resumes its uptrend from 2500 level.
Moreover, every one is talking of sharp bear mkt rally. But, I cud not find the same in the last bear mkt. Cud u pl help me out.
Thanx in adv,
Sunil
mohakkhatu@gmail.com
I agree to your views on the mkt using PE as a tool. There is a minor difference. U still believe we'll go down to 2200 appx. But, i believe bottom is in place, as the bottom was achieved too fast in oct, we might be going thru long time correction, till NIFTY EPS reaches 240-250 so that nifty resumes its uptrend from 2500 level.
Moreover, every one is talking of sharp bear mkt rally. But, I cud not find the same in the last bear mkt. Cud u pl help me out.
Thanx in adv,
Sunil
mohakkhatu@gmail.com
many thanks nishant,sunil.
nishant i simply used the data provided eod by nse site and drawn the graph, nothing special about the excel sheet. sunil reg revisiting the oct bottom on fundamental grounds i dunno once it did get near 10 p/e, but possibility of some unfavourable fundamental factors can drive it down there(or technically brkdown occurs below 2500) but it will not fall much below oct low i guess, what can make difference of it staying above 2500 lvl will be earnings upgrades based on current qtrs if the results are good, it may change the picture on fundamental grounds. if u take the last bear mkt completion year as 2003 then one can see there was a sharp rally(impulse wave 1) afterwards that continued as a fresh bull mkt, but if ur referring to first sharp downleg within that bear mkt then also there was a sharp upward rally of it occurring in may 2000(similar we were expecting now), reg sluggishness my understanding is, the fact that its not moving away too far too fast from oct lows suggests it might be still in a correction phase and even took steam out of the downmoves now happening. i agree 100% about high chances of a very prolonged/long drawn(and a boring) bear mkt now stretching to much more than the previously anticipated 3 year time frame even if we witness a 50% or more rally in price terms from the bottom thats made, that upward rally may also take 1-2 years.
regards,
abhay r somkuwar.
Thanks for yr response.
While going thru historical nifty charts for the period april 98 to sept 01 (the end of last bull mkt and end of it), i did not find any rally more than 25% in the bear phase. We had several such rallies in this mkt, like 4448 to 5400 in jan 08, 4450 to 5300 in mar-may 08, 3800 to 4650 in july 08, 2250 to 3250 in oct-nov 08, 2500 to 3150 in nov 08 to jan 09. Can we expect sharper rallies of over 100% based on historical facts or fundamentals? Many are talking of bottom of 1950 appx soon and then a bear mkt rally taking nifty above 4000 in the next 3-4 months.
Although nothing is impossible, can we expect the same?
Thanks and regards
I would like to one more thing which made me belive that bottom is in place. All the bear mkt rallies in last had been 25%,only after the final bottom was made at 850, the mkt rallied 50%. Similarly, the current bear mkt had rallies of 25% till it made a low of 2250 and there it rallied by 50%.
Thanks and regards
sunil
Dear Abhay,
there is no. contact us link on your blog. i am a small trader and very much impressed to see your Nifty PE thing
please send your contact details to me on keshava17@yahoo.in i want to discuss more about Nifty PE
waiting for your reply.
Regards
Keshava
hi keshava, my email adress is abhay_somkuwar@hotmail.com.
thanks to both for commenting and sharing ur thoughts.
Dear Abhay,
Can u send me yr pe data till date and give me yr programe where u put this data so its easy for me.
nishantderasari@yahoo.com
Thanks & Regards,
Nishant
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