So today was a wonderful day in the stock market. All the indexes rose. All the stocks rose, everyone who is a stock investor had a slight smile on their face, nothing could go wrong today. Even the traffic didn’t feel as heavy. It was a wonderful day.
Heart warming memories of many such beautiful days of 2017 came back in the heart, when stocks used to rise and rise and making money was easy.
Could it be the end of the damn bear finally? Could it be the end of pain? Is this it? Does this mean today marked the bottom?
Fingers crossed? What should I do? Is it the time to enter? Time to deploy? Will I miss out on the rally?
Come on, faith is the first requirement in stocks!
Well, no actually. Rationality is the first requirement in the stock market.
So, yes, no doubt the indexes and stocks have corrected. But where do we stand today?
There have been many views on the Nifty PE being Standalone VS Consolidated.
So I had started tracking the Nifty 500, which I have posted a few times above in my previous posts. The Nifty 500 is a constitution of the top 500 companies in India by market cap. It has domestic facing companies, exporting companies, and everything in between. The most important thing about the Nifty 500 is that it comprises of 90 plus % of India’s total listed market cap. So basically below the Nifty 500 is thousands of companies, which are no more than 7-10% of India’s total market cap. This is a very inclusive index according to me.
I have it mapped out in a highly professional manner in which any person with reasonably great skills can figure out when to deploy cash. Here I present ladies and gentlemen; drumroll, the very professional chart.
I believe one should deploy cash when the Nifty 500 is at the “Place where good things happen”.
I don’t know what will happen tomorrow or in the next 90 days or 2 years; but I know I can wait for the good place because it will come one day. Keep my fixed deposits, and invest only the interest from those deposits if I have the urge to speculate, and wait for the place where good things happen.
That’s what I am thinking in my coconut. What you are going to think in that coconut of yours is up to you.
Chart and Data Attached: 1996-2018.xlsx (228.1 KB)