morning thoughts...
As the week comes to an end with major transits in place - the markets are likely to be volatile and swing like a pendulum.
Technically the markets are in consolidation mode and will give oppurtunity to both long and short traders.
As the week comes to an end with major transits in place - the markets are likely to be volatile and swing like a pendulum.
Technically the markets are in consolidation mode and will give oppurtunity to both long and short traders.
When it comes to equity
markets, a glance in the past can give a good idea about how things could
possibly shape up in the future.
The BSE-Sensex at present has an EPS of about Rs 1,352. It currently trades at a P/E of 18.6 times. Multiply the two and you get a figure that is close to the current Sensex level.
And it therefore follows that any future price or index levels will depend on the growth or fall in the EPS and the expansion or the contraction in the P/E multiple. Prima facie, what is interesting to note is the duration of the market run ups. All those upswings which were led by P/E expansions did not last for too long. The cases in point being the market run ups from January 1991 to April 1992, April 1993 to September 1994, October 1998 to February 2000 and March 2009 to November 2010. What is also common is that from the highs, the markets corrected when valuations were quite high; in each of these cases the P/E stood in excess of 24 times its trailing twelve month earnings.
The BSE-Sensex at present has an EPS of about Rs 1,352. It currently trades at a P/E of 18.6 times. Multiply the two and you get a figure that is close to the current Sensex level.
And it therefore follows that any future price or index levels will depend on the growth or fall in the EPS and the expansion or the contraction in the P/E multiple. Prima facie, what is interesting to note is the duration of the market run ups. All those upswings which were led by P/E expansions did not last for too long. The cases in point being the market run ups from January 1991 to April 1992, April 1993 to September 1994, October 1998 to February 2000 and March 2009 to November 2010. What is also common is that from the highs, the markets corrected when valuations were quite high; in each of these cases the P/E stood in excess of 24 times its trailing twelve month earnings.
Currently, the Sensex trading
at about 18.6 times, thereby indicating that there is no real sign of worry if
the past corrections are any indication.
On the other hand, the run ups from April 2003 to January 2008 as well as the current run up i.e. from December 2011 till now have largely been driven by an increase in earnings. The latter cannot be considered as the market peak since the run up is still ongoing at the moment.
But what we can say is that with the market trading close to its long term historical valuations, the focus will be on earnings growth going forward. But if the P/E continues to rise the way it has been in the past three months - i.e. without the adequate support of the earnings growth - it could lead to an overheating situation given the limited scope of P/E expansion.
Thus, it could make sense to not pay too high multiples to stocks and also stay away from the ones which are fundamentally weak but have gone up only in the expectations of better days going forward.
On the other hand, the run ups from April 2003 to January 2008 as well as the current run up i.e. from December 2011 till now have largely been driven by an increase in earnings. The latter cannot be considered as the market peak since the run up is still ongoing at the moment.
But what we can say is that with the market trading close to its long term historical valuations, the focus will be on earnings growth going forward. But if the P/E continues to rise the way it has been in the past three months - i.e. without the adequate support of the earnings growth - it could lead to an overheating situation given the limited scope of P/E expansion.
Thus, it could make sense to not pay too high multiples to stocks and also stay away from the ones which are fundamentally weak but have gone up only in the expectations of better days going forward.
Astrologically mercury is trined which rules the brain and will create a situation of confusion and deception.
Coming to the commodity markets bullions looks strong along with base metals and energy.
Friday make huge wealth in pendulum markets
Jackpot - Buy Rajesh Exports
Cash - sell punj lyod
Futures - sell polaris software
Fii - Buy Ceat
Double Bumper Options - buy petronet lng 160 ca
Buy gold , silver , copper , crude , zinc
