This is the November 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.
P/E Ratio (on the last day of November 2018): 26.31 P/E Ratio (on the last day of October 2018): 25.00
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 November 2018): 3.44 P/BV Ratio (on the last day of October 2018): 3.29
Historical Dividend Yield – Nifty 50
Dividend Yield (on the last day of November 2018): 1.22% Dividend Yield (on the last day of October 2018): 1.27%
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 November 2018): 29.61 P/E Ratio (on the last day of October 2018): 28.88
Historical P/BV Ratios – Nifty 500
P/BV Ratio (on the last day of November 2018): 3.23 P/BV Ratio (on the last day of October 2018): 3.10
Historical Dividend Yield – Nifty 500
Dividend Yield (on last day of November 2018): 1.14% Dividend Yield (on last day of October 2018): 1.19%
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:
I am planning to regularly track AMC level AUM data going forward. So hopefully, with each iteration, the information and details will increase.
Please do note that the AUM figures are average quarterly figures published by AMFI.
The table below shows AMC-wise average AUM during Jul-Sep 2018 quarter. It also compares these figures over the previous quarter (Mar-Jun 2018) and also with the same-quarter-previous-year (Jul-Sep 2017):
Talking of the Top-3, the ICICI Prudential MF continued to lead with an AUM of Rs 3.10 lakh Cr followed by HDFC MF with Rs 3.06 lakh Cr and Aditya Birla Sun Life MF with Rs 2.54 lakh Cr. SBI MF with Rs 2.53 lakh Cr elevated itself to the 4th spot by replacing Reliance MF with Rs 2.40 lakh Cr.
These top 5 AMCs handle about 56.3% of the AUM.
And as expected, more than 95% of the industry AUM is handled by the top 20 AMCs:
Here is the list of all the active AMCs in Indian MF space:
ICICI Prudential Asset Mgmt. Company Limited
HDFC Asset Management Company Limited
Aditya Birla Sun Life Asset Management Company Limited
SBI Funds Management Private Limited
Reliance Nippon Life Asset Management Limited
UTI Asset Management Company Ltd.
Kotak Mahindra Asset Management Company Limited
Franklin Templeton Asset Management (India) Private Ltd.
DSP Investment Managers Private Limited
Axis Asset Management Company Ltd.
L&T Investment Management Limited
IDFC Asset Management Company Limited
Tata Asset Management Limited
Sundaram Asset Management Company Limited
Invesco Asset Management (India) Private Limited
DHFL Pramerica Asset Managers Private Limited
Mirae Asset Global Investments (India) Pvt. Ltd.
LIC Mutual Fund Asset Management Limited
Motilal Oswal Asset Management Company Limited
Edelweiss Asset Management Limited
Canara Robeco Asset Management Company Limited
Baroda Pioneer Asset Management Company Limited
JM Financial Asset Management Limited
HSBC Asset Management (India) Private Ltd.
IDBI Asset Management Ltd.
BNP Paribas Asset Management India Private Limited
This is the October 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.
P/E Ratio (on the last day of October 2018): 25.00 P/E Ratio (on the last day of September 2018): 26.44
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 October 2018): 3.29 P/BV Ratio (on the last day of September 2018): 3.47
Historical Dividend Yield – Nifty 50
Dividend Yield (on the last day of October 2018): 1.27% Dividend Yield (on the last day of September 2018): 1.23%
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 October 2018): 28.88 P/E Ratio (on the last day of September 2018): 30.21
Historical P/BV Ratios – Nifty 500
P/BV Ratio (on the last day of October 2018): 3.10 P/BV Ratio (on the last day of September 2018): 3.24
Historical Dividend Yield – Nifty 500
Dividend Yield (on last day of October 2018): 1.19% Dividend Yield (on last day of September 2018): 1.15%
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 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:
And unless you are a perfect timer, chances are that your portfolio would be down.
By how much? The cut would be less for those who decided to leave the party early and comparatively bigger for those who either came in late or were being way too adventurous.
In times like these when the equity markets are volatile and surprise you daily, you will come across conflicting views. Optimists will try and influence you to buy more as prices drop. Pessimists will, as usual, ask you to take away what you can and run. But it’s not that easy to take either side. We are common people who are realists and lie between the optimists and the pessimists. We use the money to achieve our financial goals and not just worry about beating or not beating the markets.
The journey was smooth and straight and almost one-way, i.e. Up. It made successful investing look extremely easy.
Just one look at the YTD returns in 2017 for large caps, mid caps and small caps in below graph and you will agree that there was very little chance that someone would have not made money:
In fact, if I remember correctly, it was one of the least volatile years in recent memory.
But 2018 came and… things changed.
And we have just completed three quarters of this year.
The story has changed and how…
At the time of writing (early Oct-2018), the large-cap index Nifty50 has given up all its returns for the year and is mostly flat. In fact, it is down -2% for the year.
But the real price correction has happened in mid- and small-cap indices. One look at the red and blue line in the graph above and you will realize. These are year-to-date figures. Cuts are bad, if not horrible.
And this is just about the indices. Individual companies have fallen much more. Many big names have come down by more than 40-50% and I am not taking any names here.
The divergence between large and non-large caps is quite large and as of date, there has been a massive outperformance of large-cap indices against the non-large cap space.
A couple of months back, I came across an interesting data point that supports this conclusion. Sourced from Stalwart website (link), here is an eye-popping data about the 1584 stocks listed on BSE with a market cap >= INR 100 crore (as on 25th June 2018):
Fall of 60% or more from 52-week highs – 106 stocks
Fall of 50 to 59% from 52w highs – 175 stocks
Fall of 40 to 49% from 52w highs – 289 stocks
Fall of 30 to 39% from 52w highs – 359 stocks
Fall of 20 to 29% from 52w highs – 336 stocks
The dataset is slightly old (June-end) but I am sure the numbers have deteriorated further. Clearly, the large-cap indices of Nifty50 and Sensex are not reflecting the reality of on-going deep correction in the broader markets.
Even if you were to analyze Mutual Fund Portfolios, the divergence between the returns delivered in the last few months by large-cap funds and non-large cap funds would be clearly evident.
Sadly, the investors who believed that the stellar performance of Mid & Small caps during last year will be repeated this year have been disappointed.
Trees don’t grow to the sky. And neither does the market.
If investors continue to disregard the risk in order to enhance returns, sooner or later they will be caught off guard. In a way, this is exactly what is happening right now.
Mean reversion is a law of markets and cannot be avoided. It happens every now and then. And past experience tells that it can be ferocious in the short term. Many who were small-cap heavy in last 2-3 months would agree with that now.
If you already know me, you will agree that high valuations make me uncomfortable. 🙂 I am not a Growth-At-Any-Price kind of investor. Rather, I am a valuation conscious common man who gives cognizance to the real risks.
I know we cannot perfectly time the markets. But valuations do act as a guide. And we need to respect it.
Please don’t think that I am trying to portray myself as someone who got the timing of this correction right. Using the State of Markets Tracker, I have been highlighting the risk of the on-going increase in valuations for some time now. So to be fair, this road bump in returns was bound to come sooner or later.
Nevertheless… what next?
I don’t know.
Even after the recent fall in small/mid-cap space, the valuations are still not cheap. Large caps still seem to be overvalued from a historical perspective. But not as overvalued as they were maybe at the start of the year. But having said that, it must also be acknowledged that there are several moving parts right now – like the mood of the population as elections approach, crude oil, geopolitical stuff, sector-specific issues, valuation itself, etc. I am not trying to paint a bleak picture here and I don’t think that this is the repeat of 2008 crisis. But the reality is that no one knows how the current situation will further evolve. And if the panic does take over due to any reason whatsoever, then the stress will increase across the board.
If you believe in goal-based investing and are investing for your long-term goals, then you should remain focused. You are already investing in line with your suggested asset allocation and hence, you should stick to it. If you are a SIP investor in mutual funds and your goals are still several years away, you should continue your regular investments as the strategy is good enough and works only if you continue to invest in falling markets too. Unfortunately, if your financial goal is more immediate and you were still heavily in equity, then you had it coming. Your allocation was wrong to begin with as for short-term goals, large % of equity should be avoided for most investors.
If you already hold a large-ish portfolio, then you should respect your strategic asset allocation (assuming you were wise enough to have thought about it earlier) and act accordingly. Ideally, rebalancing should have begun much earlier. Now it’s the market that is rebalancing the portfolios by force.
If you have surplus money to invest, don’t be too excited and try to do anything adventurous. You are excited and we all know that. Let the dust settle a bit more. Being in cash is also a decision. And cash has immense power in such markets.
Every now and then when high valuations and other factors line up in some combination, the markets will have their corrections. In theory, everyone knows how they should react to market falls. But in reality, we can’t be very sure of our actions as our real tolerance for market falls may not be what we think it is.
In fact, panic weeks and months are common if you increase the time scale under consideration. And once you do that, the earlier corrections or even the ongoing correction will seem like a blip in the returns that disciplined long-term investors eventually reap. So do not be afraid of this one. Even this will pass away.
It would still not be a bad idea to remain cautious for some more time. It is easy to be carried away by the panic selling. There is a time to be bold and there is also a time to not be bold. Depending on who you are and what goals you are saving for, you need to decide what you will be doing.
This is the September 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.
P/E Ratio (on last day of September 2018): 26.44 P/E Ratio (on last day of August 2018): 28.40
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 last day of September 2018): 3.47 P/BV Ratio (on last day of August 2018): 3.76
Historical Dividend Yield – Nifty 50
Dividend Yield (on last day of September 2018): 1.23% Dividend Yield (on last day of August 2018): 1.15%
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 last day of September 2018): 30.2 P/E Ratio (on last day of August 2018): 34.5
Historical P/BV Ratios – Nifty 500
P/BV Ratio (on last day of September 2018): 3.24 P/BV Ratio (on last day of August 2018): 3.52
Historical Dividend Yield – Nifty 500
Dividend Yield (on last day of September 2018): 1.15% Dividend Yield (on last day of August 2018): 1.04%
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 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:
This is the August 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.
P/E Ratio (on last day of August 2018): 28.40 P/E Ratio (on last day of July 2018): 28.22
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 last day of August 2018): 3.76 P/BV Ratio (on last day of July 2018): 3.70
Historical Dividend Yield – Nifty 50
Dividend Yield (on last day of August 2018): 1.15% Dividend Yield (on last day of July 2018): 1.18%
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 last day of August 2018): 34.50 P/E Ratio (on last day of July 2018): 33.59
Historical P/BV Ratios – Nifty 500
P/BV Ratio (on last day of August 2018): 3.52 P/BV Ratio (on last day of July 2018): 3.45
Historical Dividend Yield – Nifty 500
Dividend Yield (on last day of August 2018): 1.04% Dividend Yield (on last day of July 2018): 1.08%
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 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:
You want to become rich and you want to become rich FAST!
That’s what we all want right?
Thankfully, most of us understand that it’s easier said than done. But unfortunately, far too many don’t get it and end up losing tons of money instead of making it.
And the internet does what it does best – adds to the noise – and is overcrowded with a lot of misleading information on how to become wealthy. To be fair, it’s quite possible to get rich quickly, more often than you’d think.
However, it comes with a high probability of losing whatever you put into such get-rich-quick ventures. And it involves taking high-risks, putting in hard work and ofcourse a lot of luck – or let’s say a ‘lucky’ combination of all the three.
Sometimes this is true for the short run. But mostly it’s not. After a good run, mean reversions reframe the game and markets go down. And people aren’t ready for it.
As a result, people end up losing whole life investments or at best end up with a very bad experience with equities – and that can haunt them for years, make them stay away from equities (and it just translates into a big loss of wealth creation opportunities).
Again what happened there was that people believed that this is a way to get rich overnight and so hoards of investors started joining the party. But the crash that happened after the all-time highs has left most people with a bad taste for currency investments. To be honest, cryptocurrency isn’t my field of expertise, but I have close friends in Silicon Valley who have actually got rich taking a cut of this modern-day currency market.
And I mean they became filthy rich way too fast. Some were lucky to cash out before the big fall and have literally achieved financial independence. Others weren’t so lucky. I would say that in the case of crypto-riches, luck played a really big part for many people’s good fortune – there can be no denying that.
Also, there is the foreign exchange or currency market also known as forex – which I’m not sure most people know is the biggest market in the world!
If you surf around enough online financial and trading sites, chances are that soon enough, our Lord Google will contextually throw in alluring Forex Trading advertisements which highlight the magical capabilities of currency trading offers.
I personally know someone abroad who does quite well dealing in forex trading. And he has been doing it for years so he knows his trade. If you were to ask him whether it’s possible to get rich in forex trading he’d say ‘Hell yes!’. But if you were to ask him whether it’s easy to get rich trading in the forex market, he would say right off the bat ‘No way!’.
In fact, he very clearly told me that Forex Trading is not a get-rich-quick method as many online advertisements make it out to be. That doesn’t happen. It’s a skill and takes time to learn and profit from. Being properly equipped with certain tools to trade in forex and having timely funds along with proper non-impulsive risk management skills are valuable assets when going the forex way.
I, being a participant in Indian stock markets for several years, could clearly see the similarities with it.
The insights about what works and what doesn’t work in stock markets come after years of trying out various strategies, taking hits on your portfolio and your ego and what not.
It might seem that it’s easy but I can vouch that there is no easy money-making here. It is simple but not easy.
Another close acquaintance of mine got really lucky sometime back. He piggybacked another friend’s VC and Angel around bets without any clue about what the startups were exactly doing. Lady luck shined and he made a killing with a couple of super bets.
You see the pattern?
Some people ‘get rich quick’ here and there. But they are the exception to the rule, not the norm.
You need to realize that for most people, the way to wealth is typically on the slow lane. It’s good to take your chance, but more often than not, what happens is that your capital gets lost and you need to start fresh. Which is hard stuff. After a while it adds up, less money is available for compounding and naturally, the amount of money you end up making is much lesser than what would have been possible if you’d have not run greedily towards a quick highly risky scheme.
Believe me, you can wait for years to accept the perennial truth that slow and steady wins the race and compounding is indeed the 8th wonder of the world. Or you can start with time-tested wealth creation strategies and begin your journey of being really wealthy.
It might not seem as glamorous as the get-rich-quick schemes but it works.
By starting early, you can be rich enough much before you retire – something that is desirable as you don’t want to be the richest man in the graveyard! Right?
Frequently, getting rich quickly is either due to pure coincidence or extreme risk. But even hard work and willingness to take tons of risks cannot guarantee overnight riches.
So do yourself and your family a favor and assume calculated risk, invest in testing out the best strategies and work only with the best ones. Don’t ever take luck or hope into account! Both hope and luck are not strategies. 🙂
This is the June 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.
Dividend Yield (on last day of June 2018): 1.22% Dividend Yield (on last day of May 2018): 1.23%
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.
Dividend Yield (on last day of June 2018): 1.09% Dividend Yield (on last day of May 2018): 1.08%
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 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:
