Updated Nifty Valuation Analyzer: PE, PE, Div Yield, ROE, EPS Growth Rate

'Markets have touched an all-time high. should I invest now or wait?' Why ask vague questions, to be met with equally vague answers? Partially eliminate the guesswork about the state of the market with this updated Nifty valuation analyzer. The previous edition had some major bugs, as pointed out by CFP Narayan Khatri, which have now been corrected.

Let us now look at where the Nifty stands.

Some caveats that have to be kept in mind:

1) Markets crash for no rhyme or reason. They can 'crash' at any Nifty value or PE.

2) Long-term investors must understand the relevance of the Nifty PE for the long-term investor  and misconceptions about the Nifty PE before worrying about current value or PE.

History tells us that there is no particular advantage in exiting 'hot' markets and re-entering 'cold' ones.

3) If you think the market is over-valued, take some money off the table, if you will but do so because you would like to reduce stress and rest easy and not because you would like to maximize returns.

4) Exit and enter as per the requirements of your goal and not because someone says so.

5) Nifty at 9000 or PE at 25 means little. One should use multiple metrics to evaluate the state of the market. This sheet offers only a few of them.

So here we go,

A screenshot of the inputs page
A screenshot of the inputs page

Simple Moving Averages

Nifty-valuation-analyzer-2

 

Dual moving average analyzer for hurricane warnings! Details here:  Moving Average Market Level Indicator

Current level: Above both the  150 and 365 day average. Since there is no southbound movement, there is not much to say.

PE with 10Y average and standard deviation bands

Nifty-valuation-analyzer-3

 

For the first time in more than 5 years, the PE is touching the '+ 1 standard deviation' band from below. The last time the PE touched the '+2 standard deviation' band from below, it stayed there briefly and came back down gradually. If you take money off the table, be prepared for a long wait! Not all 'crashes' are sudden.

PB with 10Y average and standard deviation bands

Nifty-valuation-analyzer-4

The current PB is still below the 10Y average. So I don't think the market is 'over=heated'

Div Yield with 10Y average and standard deviation bands

Unlike the Nifty PE, the 10Y average is heading south. So it is difficult to make generic statements using the dividend yield.  The current yield is not too much below the current 10Y average. So I think it is still a good time to buy.

EPS one-year rolling growth rate

Nifty-valuation-analyzer-6

 

The current value is the EPS growth rate since a year ago.  Now that rates have been cut, let us wait and watch if the EPS is  increasing. If it does not, and only the price increases, we are heading for trouble.

Return on Equity or Book Yield

Nifty-valuation-analyzer-7

 

Current return on equity is close to what was seen in ~ 2001. Therefore, the 'bull run' has so far been governed by optimism. Let us hope the ROE increases this year.

Let us hope the market waits at current levels (or thereabouts) for growth to kick-in.

Download the Updated Nifty Valuation Analyzer

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10 thoughts on “Updated Nifty Valuation Analyzer: PE, PE, Div Yield, ROE, EPS Growth Rate

  1. Karthik

    A good way of looking at the markets, But would PEG be a better indicator than the P/E. Would be interesting to analyse the Nifty in terms of PEG and see what it has to tell us.
    What do you think sir?

    Reply
  2. Karthik

    A good way of looking at the markets, But would PEG be a better indicator than the P/E. Would be interesting to analyse the Nifty in terms of PEG and see what it has to tell us.
    What do you think sir?

    Reply
    1. freefincal

      This is a problem with the NSE server. You will need to update it once a month at least!. You will need to insert the data from the NSE server and then you can use it, provided you updated once a month.

      Reply
    1. freefincal

      This is a problem with the NSE server. You will need to update it once a month at least!. You will need to insert the data from the NSE server and then you can use it, provided you updated once a month.

      Reply
  3. sushanta

    I see that you have used the company names and codes as used by the Morning Star and MoneyControl.com sites. Do you have a similiar list for http://www.indiainfoline.com since I would like to use a similiar mechanism to download FII % ownership by quarter from indiainfoline

    Reply
  4. sushanta

    I see that you have used the company names and codes as used by the Morning Star and MoneyControl.com sites. Do you have a similiar list for http://www.indiainfoline.com since I would like to use a similiar mechanism to download FII % ownership by quarter from indiainfoline

    Reply

Do let us know what you think about the article