State of Market

As of the end of January 2019 – Average Figures

Nifty 50

  • P/E – 26.1 (26.1)
  • P/BV – 3.37 (3.41)
  • Dividend Yield – 1.25% (1.23%)

Nifty 500

  • P/E – 29.3 (29.4)
  • P/BV – 3.17 (3.21)
  • Dividend Yield – 1.15% (1.15%)
Figures in bracket are of the previous month (December 2018). Read the detailed analysis of the state of markets in January 2019 here.
 
Source of Data – NSE (Standalone figures)
 

Nifty Returns Vs Valuation Ratios – Reference Levels (Since 1999 – Last 20+ Years) 

Nifty PE Return Analysis 3 5 7 10 Year
 
 
P/BV Ratio India Long Term
 
 
Dividend Yield India Long Term
 
 

Nifty 50 P/E Heat Map (up to January 2019)

Nifty 50 P/BV Heat Map (up to January 2019)

Nifty 50 Dividend Yield Heat Map (up to January 2019)

You can read the detailed analysis here of these parameters:

Or if you want, you can also read about the earlier analysis done in:

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20 comments

  1. Interesting. At current market levels where we are at 16-20 PE, the returns are still decent at 13% p.a. for 3 year and 28% p.a. for 5 years. Although we cannot take the past trend to continue in future, it still shows that 16-20 PE is still a decent level to start buying.

  2. Your articles are very interesting and quiet thought provoking.

    Please update all indices (including sectorial) with present value, PE, PBV & DIV YIELD and their long term average values with the highest value and lowest value under the section “state of the market”. This will help the individuals to check your web site quite often.

  3. Thanks. 🙂
    This page is updated on a monthly basis for P/E, P/BV & DY values for major indices (symbolic) of overall markets (if not broader markets). I will definitely keep your request in mind when deciding what more data to include on this page.

  4. Dear Dev

    Thank you so much for explaining P/E, P/B & DY in such a simple way. I was trying since 2-3 years to understand these terms, but could not understand. Sir, can we buy / invest when-
    1. P/E is 18 or less
    2. P/B is below 4
    3. D/Y is above 1.8

    I have subscribe ULT stocks. When I am going to BUY stocks recommended by you for ultra long term, is it essential to think over P/E, P/B & DY?

    AMOL

  5. Hi Amol

    The above values for indicators like P/E, P/BV & D/Y are indicative of indices and not specific stocks.

    These figures are good indicators of judging whether markets are becoming overvalued or not. But these are not the only indicators one must look at. There can be many more. But these are good to start with.

    When purchasing individual stocks, its wise to take these numbers as starting points for overall market valuations, and not as specific valuation numbers for stocks in question.

    I hope that clarifies.

    Regards
    Dev

  6. Hi Narendra
    I have updated the data upto August 2014. And the market does seem to be overheated as of now; much above historical averages. But this does not mean that it cannot sustain at higher levels.

  7. Hi Narendra
    Its definitely time to be cautious as markets dont look cheap right now. But whether markets would correct or not is something which requires prediction. And that is what I cant do as I dont have predictive powers. 🙂

  8. Hi Dev,

    Firstly, let me convey that your website is a big help and a must read for us amateur investors. How i wish my grandfather had bought some shares :P.

    The current P.E ratios are on the higher side (near 24) But P.E ratio's can go down if corporate earnings also improve na? It need not always be via a correction.

  9. Hi Dev,

    As per the 'Dividend Yield' (%) chart, I understood that, if 'Dividend Yield' is more than the returns would be more. For example, for 'Dividend Yield' 3 and above, the 3 Year returns would be 55.1%

    But, as per http://equityfriend.com/nifty-pe-chart-nifty-pb-chart-nifty-dividend-yield-chart.html, ” Historically, a higher dividend yield (above 2) means the market is undervalued and investors should go long. On the other hand a lower dividend yield (around 1) means the market is overvalued and investors should preferably book profit and stay out of the market till the euphoria cools down. It was around 3 during 2003 signifying the grossly undervalued nature of the stock market at that point of time.”

    I am a novice investor, please guide me.

  10. dear dev if i buy nifty now ( pe ratio 22,4) it will still give a CAGR of 13-16% over a 7 year period.i.e is it safe to buy nifty now and hold for 7 years for a 15% return ?

  11. Hi Sudhakar
    The past data shows that on an average, what you have deduced from my analysis is correct.
    But you should always remember that in stock markets, the past performance may or more importantly, MAY NOT be repeated in future.
    So take your call 🙂

  12. I am unable to understand your query. A high dividend yield for an index generally indicates that index may be undervalued. If that is what you wanted the clarification for.

  13. Hi Dev,

    I find that this particular article is in contradiction to your article on market timing.

    1. Timing the market is not important but time in the market is important. Would you agree.
    2. If an investor is investing in mutual funds, then it is important to keep in mind that they have up capture ratios and down capture ratios and thus the returns could be greater then the index and compouding(as per your article) is also an important dimension to consider.
    3. Most of the investors are underinvested in equities.
    4. If one is investing in stocks after thorough understanding, he/she does not need to look at the market PE.
    5. Infact even if an investor had invested in some mutual funds at the peak of 2008 he/she would be sitting at 150% plus gains on an average whereas a few are up by 300% whereas the markets are up by 30%.
    5. Would you agree that the Indian markets are a great long term play and I mean 10 years plus.

    Regards,

    Rahul Ashar
    9833369431
    Regards,

    Rahul

Comments are closed.