Sim Stanley
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Value Investing by PE Cut and Paste Will Nifty trade 13

Sim Stanley at 10:31 AM - Jan 31, 2011 ( ) Views: 13,632

24 36

Let us see some analysis of current market conditions . Most of the people are rushing to buy now for long term . but this may not be a market to buy for long term . I am myself Bullish now , but for short term not long term .

I would not be surprised to see markets rise by over 10-15% more over next 1-2 months till the Budget . But sooner or later I expect

- A nice correction if this is another bull market .
- Bull rally coming to an end in the strong bear market 


The simple analysis is with a simple and strong tool called PE ratio. PE ratio tells us how expensive or cheap is the current underlying . In other words what kind of value does the market provide us , irrespective of the price .

Historically Nifty has been considered and shown instances of being oversold in range of 10-13 and overbought in range of 20-25 . Nifty has had a crash after after getting in the range of 20-25 and have rallied after touching the range of 10-13 .

OVERBOUGHT MOMENTS in Indian Markets

Click to enlarge , Data for last 10 yrs (Jan 1999 – 31st May 2009)

You will see that whenever nifty crossed 20 , It was time to be cautious . its not exactly the time to go short sell , but at least book your partial profits and be cautious with further buying for long term .

Current situation : As I write this, Nifty PE is around 21 . Its not a very good situation to madly buy for long term . Its a time when euphoria is at high point and it can take markets a little further. So you can jump in now with short term perspective , not long term !!, because markets may fall in some weeks or months . Expect it . but dontforce it !! .

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OVERSOLD MOMENTS in Indian Markets

Who all missed the current Rally ? I missed it . there are two reasons , I am a trader not an investor for long term (at least currently) . So I do not concentrate on it . But you could have not missed it if you had read this concept earlier and had the guts to go against the so called “experts on CNBC” who were talking about 5k or 6k for NIFTY some months back .

Click to enlarge , Data for last 10 yrs (Jan 1999 – 31st May 2009)

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If you see the chart , you can see that after touching the PE levels of 11-13 , markets have rallied back as it was too oversold !! . Again , just touching these levels of PE does not signal a BUY , its only a signal to be cautious and make your mind for long side , and start the accumulation process without fear . Markets will still make lower levels and experts on CNBC will still cry over economy conditions and world coming to an end . But market rewards the “risk assumption” , not the actions on obvious facts . You also have to decide how much money of your portfolio would you like to put in stock market after considering your risk-appetite .

What can we learn from this PE Concept ?


“We can learn from history that we do not learn from History”

This is true for almost 95% of the long term investors all over the world . They do not learn things ,they do not do any research , they do not go and read blogs or tons of informational sites , they just want tips from others and make money . the mathematical expectation of that kind of investing is negative and cant work for long term. 
Lets develop a simple concept of PE based Investing . here it is

BUY Signal : Once PE crosses below 13 .

When NIFTY PE reached levels of 13 , start accumulating the stocks and invest your money in 4-5 installment over some months. Make sure that markets are going up and down andmoving in a range . If PE crosses below 11 , its a must BUY !!

SELL Signal : Once PE crosses above 20 .

Book the profit once NIFTY PE crosses above 20 , Don’t book all profits at once . Book it in parts . PE crossing above 20 does not mean markets has to fall , its only an indication that markets may be oversold and now “smart people” will starting selling there shares to mad public . Short sell the shares once PE and Markets start falling down from PE levels of 20 . If PE crosses above 25 , its a must SELL !!

 

There have been cases of PE going up to 25-28 levels . That will happen at the peak of strong bull markets like Jan 2008 . In very strong bull markets you have to understand that PE will cross even above or below its extreme points . That’s the risk part of stock markets from which not even GOD can save you from !! :) . this is the time when your buying in parts and putting capital which you can afford to loose will help !! .

Anyone who puts 100% of there money in stock market at once on one single time on a single bet has a secret affair with financial disaster which he/she himself is not aware of . So dont put all your money at once . Only put a part of your capital at any point .

Where do you get the PE data for Indices (Nifty and other Indices)

NIFTY data http://www.nseindia.com/content/indices/ind_histvalues.htm 

PE data : http://www.nseindia.com/content/indices/ind_pepbyield.htm

Note :

  • I have divided Nifty Value by 100 to make the graph look the way it is . In graphs , so on X axis if you see 40 , then read it as 4000 for nifty . but exact 40 for PE .
  • PE value will be separate for individual stocks as PE ratio for stock can go up or down for many other reasons . So if you are doing Stock analysis , see its historical PE values and find some pattern yourself . Innovate !!


From: Sim Stanley at 01:48 PM - Jan 20, 2013( )


19 PE reversal

checking this chart clearly states that Nifty reaches the top when it is trading at 19-20 PE

This way of reversal has been happening since Jun-11 and continued till date, a fresh breakout above 20 PE is required for the Bull rally to continue

so a new all time High needed to sustain the bull run?



From: Sim Stanley at 08:25 PM - Jul 22, 2014( )


PE return


From: Sim Stanley at 09:16 PM - Jun 22, 2019( )



From: Sim Stanley at 09:18 PM - Jun 22, 2019( )


As per this pe chart for 19 years it shows that once nity touch 30pe for the next year it will move down and touch 10 pe

in 2008 it took only 12 months but in 2000 it took long 3 years!


(1 to 20 out of 135) - Latest Replies on Top | First | << Previous | Next >> | Last |
Moses Samuel at 09:47 PM - Jul 20, 2019 ( )

Market is not maintaining 12000 levels

Thanx for your alert sir

Sim Stanley at 01:33 PM - Jun 14, 2019 ( )

while market is trading at 28 PE it will not fall suddenly 

1. retail investors will start coming and invest (now via sip) even i did SIP embarassed

2.an event is seen in near future ( so it may consolidate at these levels unitl at that event) event passed and now trading at 29+pesurprised

3. A fall is sure as per historical charts index did not sustain long at these PE levels historicaly for next year index will give negative 40% returns which may be for next 3 years even

Sim Stanley at 01:58 PM - Jun 28, 2019 ( )

PE value of nifty change if the earnings of the stock behind change

so the PE of 30 may drop to 20 but the stock price may not!

Moses Samuel at 09:52 PM - Jun 22, 2019 ( )

Sir

In my understanding pe ratio reach 30 and it will come confirmly 10...

Please inform mistakes whenever redact 30pe..

Thanx for your a precious views on NIFTY

Note: one more legend says nifty will reach below 9000 in mudraa

 

Moses Samuel at 09:52 PM - Jun 22, 2019 ( )

Sir

In my understanding pe ratio reach 30 and it will come confirmly 10...

Please inform mistakes whenever redact 30pe..

Thanx for your a precious views on NIFTY

Note: one more legend says nifty will reach below 9000 in mudraa

 

Moses Samuel at 09:45 PM - Jun 22, 2019 ( )

Sir

Some more technical views expected

Thanx

Sim Stanley at 12:59 PM - Jun 21, 2019 ( )

your views are right and also can catch you by a sudden fall in prices, that is the way they trap

if we all could predict correctly we would be rich by now

Moses Samuel at 03:10 PM - Jun 14, 2019 ( )

sir

as per your previous pe ratio 28...

july 27 2018

nifty historical data shows 

nifty again going to high around 400 point and then fall

it will hit today closing + 400 point 

at that time market fall coming 

i'll expect from 28 of this month fall expepcted...

Thanx for your view

 

Moses Samuel at 03:10 PM - Jun 14, 2019 ( )

sir

as per your previous pe ratio 28...

july 27 2018

nifty historical data shows 

nifty again going to high around 400 point and then fall

it will hit today closing + 400 point 

at that time market fall coming 

i'll expect from 28 of this month fall expepcted...

Thanx for your view

 

Moses Samuel at 01:54 PM - Jun 14, 2019 ( )

welcome sir

Sim Stanley at 01:33 PM - Jun 14, 2019 ( )

while market is trading at 28 PE it will not fall suddenly 

1. retail investors will start coming and invest (now via sip) even i did SIP embarassed

2.an event is seen in near future ( so it may consolidate at these levels unitl at that event) event passed and now trading at 29+pesurprised

3. A fall is sure as per historical charts index did not sustain long at these PE levels historicaly for next year index will give negative 40% returns which may be for next 3 years even

Sim Stanley at 03:30 PM - Jul 27, 2018 ( )

Any Explanations?

while market is trading at 28 PE it will not fall suddenly 

1. retail investors will start coming and invest (now via sip)

2.an event is seen in near future ( so it may consolidate at these levels unitl at that event)

3. A fall is sure as per historical charts index did not sustain long at these PE levels

Moses Samuel at 03:58 PM - Jul 27, 2018 ( )

Thank you 

 

Sim Stanley at 03:30 PM - Jul 27, 2018 ( )

Any Explanations?

while market is trading at 28 PE it will not fall suddenly 

1. retail investors will start coming and invest (now via sip)

2.an event is seen in near future ( so it may consolidate at these levels unitl at that event)

3. A fall is sure as per historical charts index did not sustain long at these PE levels

Moses Samuel at 03:26 PM - Jul 27, 2018 ( )

From : Sim Stanley at 12:54 PM - Nov 11, 2017 ( 9 months ago)

SELL territory with 26+ pe indian index does not stay at this PE for long time

I expect a consolidation to form top

IS IT CORRECT ?

Any Explanations

Thanx

 

Moses Samuel at 03:23 PM - Jul 27, 2018 ( )

Stanley ji welcome

Thanx for your valued PE Ratio TIPS

 

Sim Stanley at 02:26 PM - Jul 27, 2018 ( )


From : Sim Stanley at 10:12 AM - Jun 08, 2018 ( 2 months ago)

nifty is at 27.7 pe trading strong still bullish may touch 29 pe before 2019 elections

 

We are still trading in this range a big fall on or before election 2019 will come

Sim Stanley at 10:12 AM - Jun 08, 2018 ( )

nifty is at 27.7 pe trading strong still bullish may touch 29 pe before 2019 elections

Sim Stanley at 01:34 PM - Dec 29, 2017 ( )

take the profits and be with trend to be on safe side

when everyone says buy u sell when everyone sell u buy

Rakesh Padhi at 03:44 PM - Nov 11, 2017 ( )

take it when market is giving...no need to be worried about PE..it's only CE for time being cool.....think about PE only when market breaks the trendline support....probably found a good support and flight ready for a take off. 

Sim Stanley at 12:54 PM - Nov 11, 2017 ( )

we are still in SELL territory with 26+ pe  indian index does not stay at this PE for long time

I expect a consolidation to form top if modi can keep giving positive news till Dec-17

Moses Samuel at 12:41 PM - Sep 13, 2017 ( )

Any P/E Ratio....

For the period 31-08-2017 to 13-09-2017

1 to 20 out of 135

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