This is the January 2017 update for the State of Indian Stock Markets.
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)
P/E Ratio (on last day of January 2017): 22.9
P/E Ratio (on last day of December 2016): 21.9
Historical P/BV Ratios – Nifty 50 (Monthly Average)
P/BV Ratio (on last day of January 2017): 3.25
P/BV Ratio (on last day of December 2016): 3.10
Historical Dividend Yield – Nifty 50 (Monthly Average)
Dividend Yield (on last day of January 2017): 1.29%
Dividend Yield (on last day of December 2016): 1.35%
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 January 2017): 26.6
P/E Ratio (on last day of December 2016): 25.3
Historical P/BV Ratios – Nifty 500 (Monthly Average)
P/BV Ratio (on last day of January 2017): 2.98
P/BV Ratio (on last day of December 2016): 2.82
Historical Dividend Yield – Nifty 500 (Monthly Average)
Dividend Yield (on last day of January 2017): 1.24%
Dividend Yield (on last day of December 2016): 1.32%
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:
Hi Dev,
can the PE, P/BV and dividend yield analysis be read together? coz the january P/E (22) shows the long term earnings would be less, P/BV (2.98 i.e. <3) shows the long term earnings would be more, the dividend (1.24) is kind of average.
your comments on the various combination scenarios?
Ofcourse Satish
Need to read all of them together. Its rarely that all indicators will point to the same future scenario at the same time. Its quite subjective and not objective. 🙂
How about plotting these values against NIFTY just so that we get a sense of how things have historically progressed once a certain number say PE=16 was hit historically?
How about plotting these values against NIFTY just so that we get a sense of how things have historically progressed once a certain number say PE=16 was hit historically?
Thanks for sharing nice information.
Great analysis. i appreciate your writing