If I sound like I am trying to negate what you say, then allow me to emphasize, that is not the case. I read your views, especially, because they are different from mine. It is beneficial to know the other side. Thanks.
Could you please provide some content regarding Mcap to GDP indicator. But, speaking just off the bat, if the indicator had to increase then GDP has to fall, which, I believe, is underway. Secondly, the if the PE ratio could be outdated, or the thing of the past because now the markets are liquidity driven, then the same should apply to the MCAP/GDP indicator? Just speaking my mind here.
Besides just Nifty PE, I track the PE of individual good stocks. I find them reverting to their historic means as and when there are headwinds. One of my most favourite occurrences is when a darling of the market, a high PE stock, fails to meet the lofty expectation, and is brutally beaten on its way down. The sight is just magnificent. (Pardon me for being sadistic. I understand that a lot of people might be losing their shirts over it.)
Currently, Energy PSU, Auto and auto related, Pharma sectors are facing such headwinds. These sectors has some really (really) good stocks, which will not let you down.