https://www.nseindia.com/products/content/equities/indices/historical_pepb.htm
Umangji: if your particular chart is oversold on monthly charts, then you can follow two strategies
Exit the stock when it gives exit signals on monthly charts snd again reenter when the momentum indicators turn up…that way you will get to protect your profits but will havr to pay 15% income tax…some of extremely strong exit signals i have discussed in details in the discussion thread on the myth of technical analysis.
Alternatively, you can hold on to a stock and ride its ups and downs till its fundamentals are intact and the NIFTY is not in bubble territory.
But if you had bought Eicher motors at around 100 rupees, all technical systems would have caused you to exit around 600-1000 rupees…no technical system would have kept you invested all the way to the top…thats the limitation technical analysis and the power of fundamentals…but the thing is …do you have that kind of foresight and market wisdom to spot syock potential for such a long time…if yes …then disregard everything else…if no…then follow some predefined exit signal
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For the other esteemed members, i would like to suggest an objective criteria ti decide whether the NIFTY is in bubble territory or not…
- take all the NIFTY sectoral indices and find out which ones and how many of them are overbought on monthly charts…
Or 2) take major global indexes such as Sp 500, Dax, Dow jones, nikkie etc and find out how many and which ones are in bubble territory.
If most of the constituents of NIFTY and most of the major global indexes are not in bubble territory…then the probability of a market meltdown in india is quite small for now…any correction should be taken as buy on dips correction.
What is the criteria to judge if market is bubble territory. There is no single reliable indicator.
If we look at P/E ratio then it also looks distorted since companies are buying back their stocks aggressively ( especially in US ).
There is one more method where people trace fear and greed index.
Do you know any method to judge the Markets ?
I found this article regarding valuations of Indian Markets :
http://www.gauravblog.com/are-markets-overheated-in-the-small-mid-cap-space/
I guess market appear in bubble territory based on tradition value major however it don’t reflect true representation of economy in the sense that few sectors like FMCG, Pharma, IT, E commerce, Consumers Discretionary /Branded plays, NBFC, Auto etc appear expensive many other sectors like steel, metal, mining, real estate, cement, infrastructure , power, energy/ oil, Capital goods, shipping, PSU banking, hotel etc appear reasonably priced and latter group is not adequately represented in major indices currently. It is likely that few portions of latter can be permanently damaged due to change in requirements or obsoletes etc some of them emerge as major wealth creator in near future as a group as no new capacity is going to come on these sectors at this level of below normal return which likely to reduce supply of these industry in near term while demand in India is always very strong for these industries. For example: Even after so much talk in last many decades still about 30% household in India has no access to electricity and even in big cities power cut is common so effective deficit is close to about 50% from its real potential at current capacity level and nobody from international market can supply power though supply of power equipment is possible. Major event to watch out in near term for macro prospective is Brexit negotiations and US presidency election after which US fed may likely to do aggressive tightening as inflation expectation may emerge. Unless there are some major triggers bull market don’t likely to correct itself easily.
Note: I may be wrong on my assumptions
Pl refer to my post and charts on why the US market and NIFTY have fall steeply in short term in the discussion thread…Nifty PE crosses 24|A statistically informed entry-exit model!