About

Rajveer Rawlin received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Friday, 27 February 2015

Major Sell off likely post the budget

yes the budget is here but that's where the good news ends. Markets appear overvalued at trailing P/E's of well over 22.  Have a look at the data below:

2008 GDP - 7.5%, Dollar/Rupee - 42, Stock market Peak January - 6350, P/E -24, 3 month return from Jan 08  < -30%
2015 GDP - 5.5%, Dollar/Rupee - 62, Stock market Peak till date - 9119, P/E -24, It remains to be seen how much of a decline will occur, as of now -6.0%.

CNX NIFTY (^NSEI)

So clearly the stock market has advanced on weak fundamentals and rapidly deteriorating macros and no matter how great the budget, a substantial sell off beckons.

2 comments:

  1. Do you think we might see Nifty/Sensex being rerated to late 19ish multiples? That itself would lead to a further fall of over 1,500 points on the Sensex.

    ReplyDelete
  2. yes good point, even after the recent sell off the market is definitely not cheap, am thinking we get to a 15 p/e at some point this year after an oversold bounce.

    ReplyDelete

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My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.