nifty p/e investment decision making graph...

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.

19th march 2009...

dow(and s&p) are in a pullback in its downtrend, a previous post had warned about this showing a big and a small positive divergence on those charts, after that a reversal on nifty fut also took place and both the mkts started moving up. it was hoped that s&p might touch 805 which it nearly did and nifty also got resisted exactly on its falling resistance tline(chart given earlier). so although the momentum has picked up, the area 2800-2830-2858 is a high resistance zone therefore caution is advised for longs here. further action on US mkt may guide the nifty movement.