This is the January 2018 update for the State of Indian Stock Markets and 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. Also, note that NSE publishes PE ratios based on standalone numbers and not consolidated numbers (Read why this may matter too).
Caution – Never make any investment decision based on just one or two ‘average’ indicators (Why?) At most, treat these 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 the last day of January 2019): 26.28
P/E Ratio (on the last day of December 2018): 26.26
The 12-month trend of P/E has been as follows:
And here are the average figures of Nifty50’s PE for some recent periods:
Historical P/BV Ratios – Nifty 50
P/BV Ratio (on the last day of January 2019): 3.37
P/BV Ratio (on the last day of December 2018): 3.40
Historical Dividend Yield – Nifty 50
Dividend Yield (on the last day of January 2019): 1.25%
Dividend Yield (on the last day of December 2018): 1.24%
Now, to the historical analysis of Nifty500 companies…
As the name suggests, Nifty500 is made up of top 500 companies which represent about 95% of the free float market capitalization of the stocks listed on NSE (March 2017).
Nifty50 on other hand is an index of 50 of the largest and most frequently traded stocks on NSE. These represent about 63% of the free float market capitalization of the NSE listed stocks (March 2017).
So obviously, Nifty500 is comparatively a much broader index than Nifty50.
Historical P/E Ratios – Nifty 500
P/E Ratio (on the last day of January 2019): 29.13
P/E Ratio (on the last day of December 2018): 29.61
Historical P/BV Ratios – Nifty 500
P/BV Ratio (on the last day of January 2019): 3.15
P/BV Ratio (on the last day of December 2018): 3.20
Historical Dividend Yield – Nifty 500
Dividend Yield (on last day of January 2019): 1.16%
Dividend Yield (on last day of December 2018): 1.14%
You can read the previous update here. The State of Markets section has also been updated with new Nifty heat maps (link).
For a detailed analysis of how much return 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: