Indian Stock Market current high valuations which were pointed out in an earlier post that at current market level one can expect market correction has come true.
One of the barometers for the Indian Stock Market is PE Ratio which signs overvaluation in the stock market. It is rightly said, “[W]hile investing one should look ahead not Behind”
Fundamentals were clearly discussed in the Post Nifty Predictions and most of the predictions have come out true. Those who have read the post and acted accordingly must have saved few lakhs of rupees from loss.
A supportive correction cannot be ignored before the market has a pullback. Hence the Indian Stock Market current scenario either the market would remain range boundness or the bearishness would continue. For investors wait and watch strategy is idle, to get the best out of the stock market being selective is the key.
Indian Stock Market Moving to Range Bound Unless Earning Expansion Justify High PE Ratio
IndiaVIX has fallen from 17 levels in February to 14 levels which only tells us that the downside is limited for now. Any negative news could have a very large impact on the stock market than usual. In the last post, we had clearly warned investors of high pe ratio and its impact on the stock market.
Updated Nifty 50 PE Ratio Historical Data
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Indian Stock Market PE Ratio Line Chart Feburary 2018
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Value Investor usually find more opportunities when the valuations are low and chances of going wrong reduce drastically.
“Bull market to continue but don’t try to invest yourself unless a professional investor” Rakesh Jhunjhunwala at ET Business Global Summit
The current increase in FDI Flow could be the reason for such high valuations since more money is following less stocks.
The right mindset to invest in the stock market based on valuations becomes crucial when the stock market is priced very heavily. When overall the market is very expensive the chances of the stock picking skills play a very important role. This is the time when your stock picking skills are put to test. Being cautious is very essential.
The infographic below explains on PE Ratio and how investors treat opportunities at large.
Other Important Infographics for Reference
Over To You
Stock Picking is a very tough skill but at times learning from others mistakes and experiences is essential and cheaper.
The best thing always happens in the comment section. Looking forward to listening from you about your experience and interesting things in the comment section.
If you have points to add I would be more than happy to hear you in the comments section. A constructive contribution is always appreciated.
But in the meantime, here’s a tip you can use right away. High Valuations give your higher hedging opportunities. Put them to use for your benefit.
Come back here and tell us about the before-and-after. I bet you’ll have something to say! If you enjoyed this post, I’d be very grateful if you’d help it spread by emailing it to a friend or sharing it on Twitter or Facebook. Thank you!