Please provide the link where we can see consolidated p/e of nifty. Should be interesting to see data of past corrections too. Thanks in advance. 
Thanks for the article.
The huge divergence between earnings and P/E seen in the graph is unsustainable IMHO. I attribute the huge divergence seen in the graph to the stimulus packages provided by Govts. worldwide. This translated to FII buying in our markets (and equity makets worldwide) which pushed price much ahead of earnings.
Hence the catchup game. 
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Looking at long term bank nifty charts, one can draw confidence of bank nifty being above 20,000 in next 1.5 years.
I would pray to god that it is not another 2008, because it was LITERALLY a bloodbath!!! I was afresh entrant in the boom market along with millions others. (Though I was one of the luckiest guys who was able to exit Reliance Power with profit !! 
).
Coming to the point, if it happens again, forget small/mid caps, everything will be in deep deep red, including the biggest stocks out there. I remember I did buy Tata Motors just before the pick at around Rs 750 and it was down to Rs 130 in 10 months, a HUGE erosion of more than 80%!! It is just an example to illustrate the intensity, it happened to every stock out there with not a single one exempted.
Well, I wasnāt having enough patience then to hold on to Tata Motors with 80% loss and I cashed out, but much to my regret it rebounded to 1250 in two years making it 10 bagger!! But there were many stocks out there which never rebounded which were enjoying their golden period before this mayhem happened. Like all those infra stocks Unitech, IVRCL, HDIL, steel stocks like Hindalco, Tata Steel, any many more.
Now when I look at the whole story in a hindsight I think it provided a life time opportunity to buy best of the best scrips out there which one usually wouldnāt buy due to very high valuations they always trades in. For example the likes of eicher motors or jubilant foodworks or page industries. Because if index goes down south with the intensity as in 2008, it will drag everything down with it whether it is a good stock or bad. Trick is you should be sitting on the cash at that point of time when it happens as you never know when it is a bottom.
So with that experience I actually started accumulating some of the good stocks since some time as per my own view. I might be in red some time but If I am holding on to winners they are going to shine 5 years in the future regardless of where they are going in short term.
But one thing is for sure that if the index goes down like 2008 I will sell my house (I wouldnāt sell my HOME but it is to illustrate the intensity) to buy my dream stocks!!
Again this are my personal views, one needs to take their own decision based on their beliefs.
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I love how everyone has gone from being totally extremely absolutely positive about achieving 20%+ growth rates for until the end of time to predicting gloom and doom about the market hitting 2008 type PE bottoms in less than a year! How does that happen?
I understand most of the people (including myself) on this forum are salaried and have a regular source of income in the form of their salaries. This allows them to buy in tranches at all levels. As buffet said many times about coca cola - about how it went through the worst depression in the history of mankind, 2 world wars, multiple oil price shocks, a US president assassination, multiple famines and many other events where everytime it seemed like the world was coming to an end. But in the end if you remain invested in that wonderful franchise you ended up doing pretty well for yourself. The dips would only provide more opportunities to buy!!!
I feel instead of timing the bottom, one should worry about owning quality businesses and keep adding in lots with time as the market goes down (and no one - absolutely no one can predict for sure btw). If the business is available cheaper than instrinsic value it is a buy - as simple as that! It is becomes cheaper still - buy more!!!
I will not be shy of resorting to leverage (upto the extent of lesser than 50% of my annual income if need be) if the market drops by 40% from here.
In the meanwhile at this price I am a clear buyer in:
- Jubilant Foodworks
- MCX
- HDFC Bank
- Wim Plast
- Mayur Uniquoters
I dont see how any of whatever it is that is happening out there in the āglobal scenarioā has any kind of material impact on the āLONG TERMā earning power of these franchises!
Disc: I hold shares in all names mentioned above (except Coke)
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Correct me if I am wrong, but, 50% of the scrips where never able to recover their past glory after the 2008 Crash.
Disc : Am Novice to investing.
On a lighter note just for some laughter
In an investment seminar a man saw a beautiful lady and falls in love instantly. He proposes her. But being a financial planning expert she asks about his backgroundā¦
He said - āā¦well, I am an ordinary man today, but few months later, after my ailing father dies, I would inherit 300 crore property ā¦
ā
The lady was deeply impressed ā¦and they exchanged thier business cardsā¦
ā¦and within a month
the lady walks into his house as his step motherā¦
Moral: Investment is subjected to market risksā¦
Donāt sell your dream to others before it becomes reality 
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Haha. That was a good one. But as they say,
āA smart man learns from his mistakes. A wise one learns from the mistakes of others!ā 
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Being in equity markets since some time my belief that it is more of behavioral game if you want to be successful rather than being genius in identifying great stocks is getting stronger.
Just last year when there was stock market euphoria I was seeing many demat accounts being open and many new investors being confident of earning money by leveraging, posting tips and advices in social groups, discussing how they made a killing in particular stock. Now I see many of them giving advice to stay away from stocks, discussing china problems, macro problems and many of them have sold all their positions due to fear.
If we are to extrapolate the same behavior to be shown by mutual fund holders it might cause a ripple effect in downtrends. People seeing their fundās NAV value declining will redeem their mutual funds. The funds will inturn have to the sell their holdings to release the payments which might again cause decline in stock price and cause more fear and more people exiting.
I do not know when this ripple effect or macro problems like china, oil will get over and whether we will see a bottoming out or a 2008 like recession.
Meanwhile when many seem fearful I think its good time to buy in staggered manner.
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A very interesting coincidence has been the quantum of the fall in the first push and the third push to the bottom.
In 2008, in the first push NIFTY fell by around 1400 points and in the the third push too, the fall was approximately 1400 points (calculations done on closing basis).
In 2015, in the first push the NIFTY fell by 700 points and now in the third push too NIFTY is down by 700 points on closing basis.
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Three pushes to the bottom is a fairly well known bottom formation process. And since markets are fractal in nature, that pattern works on all the time frames. While traders may use it on hourly charts, when applied on monthly charts it usually marks the end of a bear phase and begining of a long term market bullish peroid.
The only danger to us as investors is not to over analyse thingsā¦just keep it simple and take decisions on monthly chartsā¦Select a good stock and make a big purchase when it makes a technical bottom on monthly chartsā¦buy only when both the conditions are met and buy stocks which are low debt, and profitable companies and which are market leaders in their field and preferebly theme based stocks:
Some of the stocks that can be bought in the next 2-3 months ( as and when bottom formation signal are obtained) are:
NIIT Ltd --Skill India theme, market leader and very strong fundamentals
SREI infra - Dominant position in Equipment Finance having 60% market share
KEC International: The biggest and best Power T&D company
AKSH OPtifibre: DIgital India theme, biggest FRP rof producer, low debt, increasing topline and bottom line
Nectar Life Science: Biggest maker of Cephalosporins, trading at a low P/E of below 10 and awaiting FDA approval for formulations
Balrampur Chini: Best and strongest sugar companyā¦very good result expected in Q4 as the sugar price is now around 29-30
PFS: Dominant player in financing renewable energy power plants
TFCIL: Monopoly in Tourism Finance / hotels finance
Ballarpur Industries: Biggest paper maker in India, turn around due to debt reduction
FCEL: A big player in organised retail
HSIL: Biggest player in Sanitaryware
Pennar Industries / fedders Lloyd / Sanghi Industries/ Deep Industries/ vst Industries/ HT media/ jand K bankā¦and so on
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In 2008, NIFTY fell by 1400 points and entered bear market in the first push itself. In the 2015 fall, the NIFTY is still above the bear market limit of 20% even though the market is in the third push to the bottom.
The net cumulative effect of the RSI range (still above 40) and quantum of falls makes it a very strong probability that this is a steep correction in a bull market and not a bear market per se.
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Thatās exactly what tough environment does, wipes out the weed!
I think that NIFTY has a bottom in place nowā¦ in April or May the NIFTY may approach 7900 and from thereon it will fall quite steeplyā¦ in that fall either the NIFTY will make a higher top or the monthly RSI will make a higher top, indicating bullish divergenceā¦
Either way, lets be prepared to be very cautious around 7850-7900 and very brave around 7200-7300.
The fall of April / may is going to be the springboard from which market bounces for the next 2-3 years.
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hi abhishek,
can you explain your resoning behind these stocks?
HI Ritu, difficult to present my entire analysis here but I can always write in 1 or 2 lines.
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HDFC - I dont know if anything needs to be said here. I think everybody is aware of the story. While expensive, it is one of the only banks with a large percent of their books in direct consumer loans insulating them from the ups and downs of economic cycles.
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Mayur Uniquoters - enough has been said on the forum again. What I like is a ROCE oriented promoter who is constantly making efforts to move the up value chain (higher margin products). Great margins and return ratios for a textile business. Leader in the field with poor competitors (only unorganised). Lots of potential in the export auto business. PU coating plant is an ace in the hole for further margin expansion whenever that comes up. Reasonable valuations specially after the last 2 years time correction.
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Wim plast - Cello brand has good recall and image of quality in the mind of consumers. Good distribution and reach. Has been growing consistently for the last 10 years - recession or no recession and should continue to do so for the next 10. While they face some issues with regards to the cooler business and patent infringement, I think once thats behind them, it can provide another kicker to growth. Reasonable valuations.