The #Nifty currently sports a #P/E ratio (trailing) in excess of 20 (Data courtesy Sanjay Jaiswal at Market Pulse):
Invert this and you get an earnings yield of 5.0%, you can add about 1.2% for dividends bringing the total to 6.2%, the current risk free rate which is the return on 1 yr bonds is about 7.5%, so why bother investing in risky stocks to generate 6.2% when you can earn 7.5% in the bank risk free?
Invert this and you get an earnings yield of 5.0%, you can add about 1.2% for dividends bringing the total to 6.2%, the current risk free rate which is the return on 1 yr bonds is about 7.5%, so why bother investing in risky stocks to generate 6.2% when you can earn 7.5% in the bank risk free?
So despite the recent correction the market is still overvalued and will most likely fall further in the near term.
Earnings Yield Suggesting Nifty Overvalued http://t.co/6UAZyDoKWH pic.twitter.com/RYZlugF9Z5
— samuelR (@RajveerRawlin) September 4, 2015
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