Friday, July 23, 2010

PE R chart of Nifty from the year 1999


Nifty's PER(Price/Earnings Ratio) chart from the year 1999, prepared and posted by Shri Abhay Somkuwar in his blog "value trading" on 6th April 2010 is reproduced above. PER exceeded 24 only on two occasions ie. in 2000 and 2008, after a gap of eight years. On both occasions heavy market crash followed and PER came down to 12. As financial cycles are generally of eight years duration PER exceeding 24 may not happen now and then. Therefore, ordinary retail investors are advised to ignore the profit beyond 23 (2+3=5, all fib numbers) and stay away from the market till PER reduces to a reasonable level after a correction. Who are extremely confident and able to take risk can ignore this and try their luck.

4 comments:

Rajib said...

Nice Observation ... thanks for posting ... can this be used with some amplification factor for short-term?

Sandy said...

Hi Nandi GM. Thanks for your reply. I have a feeling that market would reach about 5700 before correcting. This is as par the past Nifty moves and technical studies. Please provide your levels so that it can be confirmed with your calculations

Sandy said...

Nandi please help with your excel sheet & methods or automate your level calculation so that at about 3.20-25 p.m we are able to enter the approximate closig value of nifty to get the next day's level. Please requesting with folded hands. Regards.

Nandi said...

Dear Rajib,
Visited your blog and it is a nice one. Please read Abhayji's latest post.

Dear Sandy,
Nifty average is yet to move to M2 range. If it moves, the target will be 5642 ie. centre of M2(Prati Madhyamam).