🔷️On 22nd March’20 we had told that Nifty is very close to bottom of 7200/7000 and we don’t see much downside and one should start buying based on past history and on parameters of P.E, Nifty EPS and P/B ratio.And That proved us right.We saw nifty forming bottom around 7500 levels and Rallying close to 11300 in just 4 months.
Our old Link of 22nd March’20 👇👇
🔷️Currently NIFTY is trading at PE Ratio of 30 as of 31st of July’20 and this is the highest levels in LAST 20 years.
🔷️Nifty P/B ratio as of 31st July’20 is 3.12.Nifty EPS is 366.70.
🔷️There can be some Healthy correction in markets after a strong rally from March lows. Please note that we are not telling that Index will head towards crashing zone or we can see correction like March going forward and it does not mean what you should initiate shorting – We may see a healthy correction before next leg of Rally starts. In other sense, we are informing that we have to be very caution at current situation and manage our risk.
🔷️The past data shows whenever Nifty P.E ratio crosses 28 To 30 zone we see some corrections in markets.Following Table shows Data of last 20 years.
🔷️BIG QUESTION NOW IS? WOULD HISTORY REPEAT??ONLY TIME WOULD TELL?
One can Follow Few Thumb Rules based on P/E Ratio :
1️⃣ If PE > 28 Take Vacation from Stock Market
2️⃣ If PE 25 to 28 : Do Research for good fundamental Stocks
3️⃣ If PE 23 to 25 : Short List your stocks for Investment
3️⃣ If PE 20 to 23 : Start Investing
4️⃣ If PE 17 to 20 : Increase Investing
5️⃣ If PE 15 to 12 : Break all your Fixed Deposit and Invest all.
6️⃣ If PE < 12 : Beg – Borrow – Steal and Invest.
Disc – All views are personal and only for Educational and study purpose only.Past Data is just purely for study purpose only.consult your financial advisor before investing or taking any position based on above article.