I look at many factors and combine them so that it can give me a clear picture . For example one more factor which i add along with PE is the Advance Decline Ratio ( Available on Nse Website ) . It says that in August 2016 Advance to decline is around 0.8, approx the same figure as of February 2016 . So this gives a hint that we are still not overbought . Another market sentiment indicator is the put call Ratio which is also helpful .
Rakes, as we all know is a big bull in the market. He has never ever said of market decline. Nor in 2003 dotcom bubble, nor in 2008 financial and housing crisis nor in 2012-13 meltdown and also not in 2015-16 china & fed rate increase crisis.
Believe me none of the big guys will ever warn you or give proper recommendation to enter / exit ever. Its upto us to act wisely. I personally have booked profit in 33% profitable and kept rest to book profits when market nears 9100 and rest invested as one can never predict exact bottoms.
You are right. This rally can sustain next 3-6 months more due to excess liquidity. Market should not fall until there is euphoria, which will start as we touch 9000 on nifty. Thats when every analyst will suggest to buy, i.e. at exact top. And give target of 10k on nifty. That is the indication that one should sell when every other person is buying… 
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The Nifty topped out in March 2015 and after that it went into a year long correction…we ate coming iut of a year long correction…is this how market tops are formed? Are market tops not formed when the market keeps making new highs and there is lot of euphoria not jstified by fundamentals?
Markets are at very high p/ e because bsnking, infra, metals, oil, power, capital goods, roads, and housing are in bad condition…may be market is anticipating that atleast 1 or 2 of these sectors will start performing and P/ e will come down…even ss the market rises.
Yes, totally agree. Markets look overvalued. There is a strong possibility of a correction in next few months. I would wait till markets come down below PE of 20.
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I have exited 30% of my portfolio in last one week( mostly stocks which looked over valued). This will also provide adequate cash in hand when there is some correction.
Problem is see is that there is no foreseeable strong trigger for markets to correct.
I am still a novice at investing and I am sure @dcoolsam nd @Mehnazfatima could provide more insights on this.
I use the following simple strategy:
- I always buy stocks in SIP mode. When markets are at high, I book periodic profits (only on stocks whose valuations are stretched)
- I park the received money in my home loan account (which saves 9.5% interest for that much amount)
- Whenever there is a good opportunity available to enter or a new stock idea that looks interesting, I withdraw from my home loan account and start buying in small chunks.
At the current levels, I am uncomfortable with the fact that the earnings growth are flatter than the market run off. Hence I am sitting on a bit of cash and I can wait 3-6-9 months to get a suitable entry.
However as you have rightly pointed out, there are very less triggers that may pull the market down in short term (I am fairly confident that India-Pak tensions may not escalate into a war)
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Hi,
Earnings have been poor for most of the Nifty 50 and Nifty 500 companies. Please check the report:
I “park the received money in my home loan account (which saves 9.5% interest for that much amount)”
Interesting aspect. I always wandered if I can use by HL account as saving/current account I.e. parking surplus fund, if any and need based withdrawal from excess pool. Curious if this provision is available with all banks or only few have this much customer centricity.
@chets - by any chance if you know this is available with ICICI Bank . also are there are some condition apply around this? ICICI is charging 9.4 on my plan.
I am using SBI maxgain home loan product. I don’t think Icici and Hdfc have any similar product.
You may want to double check though.
Guys the real danger to NIFTY is not from earnings but from S&P 500…as you can see from the monthly chart of S&P 500, it is very very ripe for a huge correction / fall…and if S&P falls, the fiis will cause the indian market to fall too, by pulling out some money.
The American markets may fall within next 1-3 months…the trigger can be the next months presidential election results or the rate hikes by US fed…or anything…the US market is waiting for an excuse / pretext to fall…it can be anything…
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I guess NIFTY has already broken the channel on daily chart. If it comes down and bounce back after touching the upper line of channel than breakout is getting confirmed. Than we might see resumption of bull run. Otherwise it may come down and start following channel again if breakout is fake.
So far us earnings have been surprising positively. Hard for index to break down if earnings are positively surprising…
AS i had feared, the S&P 500 is falling on the excuse of trump leading in the election surveys.AS the American markets fall, they are dragging down NIFTY…as indicated by daily FII selling figures.
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The panic situation could be used to make few purchases if it falls drastically.
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Dear Mehnazfatima, How do you check these daily FII selling figures?
@basumallick …the same pattern in S&P500 …topping out pattern…
