State of Indian Stock Markets – August 2016

New inclusion in this month’s State of Indian Stock Markets.

I have also included ratio analysis for Nifty500 this time. So from this month onwards, you get historical analysis and Heat Maps of Nifty50 as well as Nifty500‘s key ratios, namely P/E, P/BV ratios and Dividend Yield.

Please remember that these numbers are averages of P/E, P/BV and Dividend Yield in each month. Neither Nifty50 heat maps nor Nifty500 heat maps show the maximum or the minimum values for each month.

Caution – Never make any investment decision based on just one or two ‘average’ indicators. At most, treat these Nifty heat maps as broad indicators of market sentiments and a reference of market’s historical mood swings. 🙂

So here are the Nifty 50 Heat Maps…

Historical P/E Ratios – Nifty 50 (Monthly Average)

P/E Ratio (on last day of August 2016): 24.09
P/E Ratio (on last day of July 2016): 23.62

Historical P/BV Ratios – Nifty 50 (Monthly Average)

Now, to the historical analysis of Nifty500 companies…As the name suggests, Nifty500 is made up of top 500 companies which represent about 94% of the free float market capitalization of the stocks listed on NSE (as on March 31, 2016).

Nifty50 on other hand is an index of 50 of the largest and most frequently traded stocks on NSE. These represent about 65% of the free float market capitalization of the NSE listed stocks. So obviously, Nifty500 is a comparatively broader index than Nifty50.

Historical P/E Ratios – Nifty 500 (Monthly Average)

P/E Ratio (on last day of August 2016): 28.23
P/E Ratio (on last day of July 2016): 27.16

Historical P/BV Ratios – Nifty 500 (Monthly Average)

P/BV Ratio (on last day of August 2016): 3.01

P/BV Ratio (on last day of July 2016): 3.01

Historical Dividend Yield – Nifty 500 (Monthly Average)

Dividend Yield (last day of August 2016): 1.19%

Dividend Yield (last day of July 2016): 1.24%

You can read about last month’s update here. The State of Markets section has also been updated with new Nifty heat maps (link). For detailed analysis of how much returns you can expect depending on when the investments have been made (at various P/E, P/BV and Dividend Yield levels), please have a look at these 3 posts: