I regularly update the State of Markets section (link) on Stable Investor. This time when I updated it, I took a step further and decided to try and publish heat maps for 3 popular ratios (P/E, P/BV, Dividend Yield) of Nifty 50, on monthly basis.
The numbers are averages of P/E, P/BV and Dividend Yield in each month. The maps don’t show the maximum and minimum ratios of each month.
As with any such ‘average’ indicators, its worth saying that you should not make any investment decision, based solely on just one or two indicators. At most, these heat maps should be treated as broad indicators of market sentiments.
So here are the Heat Maps…
P/E (Monthly Average)
P/E Ratio (on last day of April 2016): 21.24
P/BV (Monthly Average)
P/BV Ratio (on last day of April 2016): 3.27%
Dividend Yield (Monthly Average)
Dividend Yield (last day of April 2016): 1.37%
For detailed analysis of what have been the historical returns for investments made at various P/E, P/BV or Dividend Yield levels, I suggest you have a look at these 3 posts:
- Nifty P/E Ratio Vs Returns Analysis
- Nifty P/BV Ratio Vs Returns Analysis
- Nifty Dividend Yield Vs Returns Analysis
I am planning to see whether I can also bring in data for some other mid-cap / small-cap indices from next month. Do share your feedback and help me improve these monthly State of Indian Stock Market posts.