Few of the subscribers are asking these questions to us:
- Market closer to all-time-high in 2008. Will it crash?
- Should we sell all holdings & buy later?
- What is the peak level according to Futurecaps?
Our quick-answer is NO!
We expect NIFTY should reach around 7500 levels, the target year should be 2016.
According to our research, Market crash is tied-up with economy. Whenever the economy is over-heated through boom, market start to crash.
Usually, market will crash 6 months before the economy bust.
We use NIFTY PE Ratio as the economic barometer.
There is a period of 8.4 year cycle going on this parameter.
You can see that the NIFTY PE RATIO in 2008 was around 28.
NIFTY PE RATIO in YEAR 2000 was around 28.
IN BOTH CASES MARKET CRASHED!
CURRENT NIFTY PE RATIO IS 18
We advice you to buy quality scrips for long term holding.
There can be slow down during election period. The economy is improving & we expect 30-40% advancement of market from current level.
NIFTY PE RATIO might reach 28 level once NITY INDEX is above 7500.
One may ask, Why NIFTY PE RATIO did not increased even after NIFTY INDEX reached 2008 level.
The answer is:
- NIFTY PE RATIO is calculated based on PE Ratio of 50 scrips. Their earnings determines the AVERAE PE RATIO
- Banking Stocks lows contribute to the NIFTY PE RATIO lows
- Inflation corrodes value of earnings
- Currency Depreciation corrodes value of earnings