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Commentary

Nifty's P/E is 27

The Nifty P/E is now officially 27. This is close to being the most expensive Nifty in the last eight years:

Nifty's P/E is 27

It’s tough to decide where to go, but earnings season is on now, and in Feb we should revisit and see where the P/E lies.

  • Anonymous says:

    >Deepak – I’d say this is typical of pre-earnings mode, although 27 is high. I guess the P/E has risen in the hopes of better earnings and earnings growth. Then we have the budget coming, which going by recent developments would appear to be quite favorable to the market. As the effect of the budget cools down, we’d enter earnings season for the next quarter as well as fiscal, which going by current momentum also looks favorable. All in all, we may be in for a very good 3 to 6 months. Nifty P/E maybe 35 by the time all of this is played. Thats when it’ll be time go short, until then enjoy the ride and make some money…

    Hari –

  • kram says:

    >Deepak:
    Is this trailing P/E or the silly forward P/E that appears every 5 years or so in analysts statements when the market is near-peak?

    In my opinion, I think Hari is almost perfectly right about the timing and so I believe he has been around for some time in the markets.

    But Hari, if the P/E reaches 35 does it mean price will rise on same earnings? Or Earnings will decline on same price? If earnings decline, won’t price also decline with a slight lag, thereby preventing 35 being reached? 🙂

    And if, as I believe, gross earnings will be a mixed bag and generally same or slightly lower than previous quarter, do you think 35 will EVER be rerached? 🙂

    Just muddying things a bit.

    cheers,

  • Deepak Shenoy says:

    >trailing P/E Kram, from the NSE web site.

    I don’t deny that 35 is achievable. Heck, we were at 40+ in 1992 – but we haven’t gone beyond 27 in the last 10 years. I think if we do 35 in this environment, I would be terribly surprised, but I have known weirder things.

    So will it be P/E expansion or earnings growth? My bet is that both will come down in the next two years.