Is the Indian Stock Market going towards Crash or Correction ?

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Is the Indian Stock Market going towards Crash or Correction ?

Is the Stock Market in India were its Life time high, Would you planned for this ?

While the Global economic factors have affected not only the Indian Stock market in the past one year, but for the other Global Indices. The Indian Stock Market touched a new at the start of the year 2019 – Nifty50 and Sensex. With the ongoing US-China Trade war and the Domestic elections results are the key factor for the Indian Stock Indices.

Shares of many listed companies are trading in its 52 week low. Mid and Small Cap stocks are already fallen and expected to come up. Although there is an opportunity to buy these shares at a low price, the Top Benchmark indices were trading near the life time high – Nifty and Sensex.

Global Market experts have already said that the Stock Market in India is Over valued and suggesting to be Cautious. What it tells to the Investors – The Three Key Factors.

  • P/E (Price to Earnings)
  • P/B (Price to Book Value)
  • Dividend Yield

Currently the P/E ratio of the Nifty50 and Sensex are trading near 29. Due to this, the Value of P/B is higher and the Dividend yield is at low. This is not a good thing to consider for the Stock Market here.

Sensex PE Historical data

Whenever the P/E ratio of Nifty50 and Sensex is higher, then the market itself can be adjusted. Adjusted means itself corrected or crash in the nearby weeks. So the Market may downturn whenever the price is at higher or some economic factors may have a significant impact on the Market.

Generally where the Market indices are higher, then the earnings of a listed company may go down. The historical evidence shows that the earnings quarter for the listed companies were better, when the Market is Under value or Discounted.

Nifty Historical PE data

We can lookout this in the upcoming weeks. We should not take this as an assumption. One should compare the Market Indices with the Quarterly earnings. Whenever the P/E ratio is low, then the Dividend yield will go up or better. It is a favorable one for the Market Investors in a long term.

The Indian Stock Market may not go for a downturn in the upcoming days, if the Election results are positive for the Market. Then the market may touch a new peak in the next few weeks. As we said, again the Market Indices were take its Life time high – It’s Overvalued. Huge profit booking will come after the Overvalued sense, much of the indices will heading towards correction or a crash. Investors are better off buying or accumulating shares at the times of Correction.

The Nation’s import value of Crude, Trade war between the Giant Countries, Dollar-Rupee Conversion and the future policies of New Government may affect the Earnings of the Public Listed Companies in the Indian Stock Market.

Wait, Wait and Watch Cautiously – The Value Matters !

Kindly share your views / comments with a smile 🙂

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