State of Indian Stock Markets – September 2016

This is the September 2016 update for the State of Indian Stock Markets.

But before I get to the regular analysis, I want to share my thoughts on the recent aggression at our borders.

On 29th Sept – as soon as the government announced that the Indian army had conducted “surgical strikes” on terrorist launchpads in Pakistan the previous night, the Indian markets reacted negatively. The strike was in response to the attack on Indian soldiers in Uri just 10 days back.

A fall in market is something I welcome. But this is not how I want markets to fall.

I am no expert on defence or geo-political matters. But as far as the economy is concerned, a war is not a good thing. Resources have to be diverted towards war and growth suffers. A friend sent me a message asking whether I was happy with the fall in markets?

The answer is that I am not happy. Even though current valuations make it very easy to predict a correction.

I want markets to fall but not for this reason.

Its easy for all of us sitting here to share our views about whether war is good or not. But it is fought there at the borders – not by us but by our defence forces. And we all know what happens when wars take place. People lose their lives.

I bring this up because I was disturbed after the attack on Indian forces in Uri (I have a few friends in army). And I was happy by the counter-measures taken by Indian forces later.

But we should be careful what we wish for.

War is the easiest solution that our mind throws up. But is it really? Think of those who actually will be fighting on ground. You answer might change…

Lets move on now…

As usual, this monthly update includes 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)

historical nifty pe ratio

P/E Ratio (on last day of September 2016): 23.4
P/E Ratio (on last day of August 2016): 24.09

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

historical nifty pb ratio

P/BV Ratio (on last day of September 2016): 3.27
P/BV Ratio (on last day of August 2016): 3.36

Historical Dividend Yield – Nifty 50 (Monthly Average)

historical nifty dividend yield

Dividend Yield (on last day of September 2016): 1.29%
Dividend Yield (on last day of August 2016): 1.22%

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)

nifty 500 pe analysis

P/E Ratio (on last day of September 2016): 27.49
P/E Ratio (on last day of August 2016): 28.23

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

nifty 500 pb analysis

P/BV Ratio (on last day of September 2016): 2.95
P/BV Ratio (on last day of August 2016): 3.01

Historical Dividend Yield – Nifty 500 (Monthly Average)

nifty 500 dividend yield

Dividend Yield (on last day of September 2016): 1.24%
Dividend Yield (on last day of August 2016): 1.19%

You can read the 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:


  1. Hi,

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    After 10 years of working and newly married, I had no savings and 3 loans. Thanks to my financially prudent wife, now I am completely debt free and have savings equal to one year salary. The turning point was making my financial plan for lifetime and staring at the ridiculously large amount of money needed for retirement.

    I have still been making mistakes.. Invested in dividend funds instead of growth. Did not make asset allocation plan etc. Also, was having uneasiness given the stock market fluctuations. Going through your site has changed my perspective. Thanks. Will work on the advice provided here and try to take my mind off short term and keep investing focusing on long term. Thanks

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