🔷️Nifty P/E Ratio is one of the most Reliable ways of understanding whether the market is overvalued and a correction is due or Not?
🔷️If we look at the past 20 years of Nifty’s Historical P/E than there is a clear pattern which shows when the market is overvalued, correction is always due
NIFTY 20 YEARS HISTORICAL P/E CHART :
🔷️If you analyze the chart, you will find, every time the Nifty P/E was above 25-27, there was a correction. On the other hand whenever the Nifty P/E was below 15-12, the markets bounced back very Smartly.
🔷️Currently, Nifty is trading at a P/E of 29.02, a level which is unsustainable for long term, indicating a correction Sooner or Later.current Momentum can continue for longer time as smart money can pump in for short term & can even command High PE in short term.
“Markets won’t behave as you expect them to behave just because you have found its rhythm. You will not get returns just because you want them“
🔷️But the above data set and relying on a common-sense based approach to investing tells that investing at low PEs is difficult but mostly profitable trade.
Disc – All Views expressed are personal and only For Educational & study purpose only. Consult your financial advisor before investing or taking any position based on above article