NIFTY EPS vs P/E
04-May-11 1 Comment
Played around some more with the market data. The chart below plots the locus of the NIFTY (solid, curvy red line) across the various EPS’ that it has had on the first day of each quarter since 1Apr2008 superimposed between a band of P/Es ranging from 12 to 26. The NIFTY has flirted with both these P/E envelopes at least once since 1Apr2008. Cycloidal? We are around 260 now. If it is cycloidal then it must droop. Which means the markets must fall. Am I crazy or are the markets crazier? 🙂
The Third I 
I think commodity prices will start coming down now, also a lot of froth in these markets is due to risk premium of Middle East crisis and speculative positions. We have seen how silver has almost fallen 20% after the contract margins were raised in China and India. Therefore I think commodities like Crude, Copper and base metals are next in line with Silver which has fallen nearly 20% from the peak in a week. This should bring inflation down and should trigger a big rally in Indian and emerging markets. This should begin somewhere in the middle to end of May.
My broad view is if commodity prices comes down by the end of this month which I think will happen, Indian markets could break all time High’s by Diwali i.e. October end. 🙂
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