See the attached the Nifty P/E chart. This is the chart we should be trading with because the FIIs are looking at it.
Nifty has traded in a P/E range of 10.5 to 26.5 in the last 14 years from Jan 2000 to Oct 2014. About 95% of the time, Nifty has traded in P/E range of 12 to 24, with P/E 15-17 as ideal buying level, and P/E 21-23 as ideal selling level.
Risk-reward ratio for investors has been poor above P/E 21, but nimble traders can ride the Nifty long and exit/sell on downturn. Nifty is currently near P/E 22 at cmp 8383. There is trend line resistance on Nifty P/E chart around 23, so maybe 4-5% upside left till 8700, maybe not.
The following Nifty P/E Chart credit goes to Piyush Dwivedi.
World Bank cut its growth forecast for developing East Asia to 6.9% for 2014 and 2015 from 7.1% (forecasted in April).
US unemployment slipped to its 6-year low of 5.9% in September from 6.1% in August. Meanwhile, US non-farm payrolls increased by 248,000 in September, exceeding the market consensus of 210,000. As a result, the Dollar was close to its 4-year high.
The US Fed in its FOMC minutes (September 16-17) said that the current stance is appropriate amid concerns of global growth and the possibility of a stronger Dollar weighing on the US economy.
European Central Bank (ECB) maintained status quo with key policy rate unchanged at 0.05%. It unveiled the details of its purchases of asset-backed securities and covered bonds, scheduled to commence from mid-October.
Suzlon Energy Ltd had, pursuant to a resolution passed by its Board of Directors on May 03, 2014, issued separate notices each dated May 06, 2014 convening meetings of the holders of the 0% October 2012 Bonds, the 7.5% October 2012 Bonds, the 0% July 2014 Bonds and the 5% April 2016 Bonds to consider the proposed restructuring of the Existing Bonds. The meetings of the holders of the Existing Bonds are proposed to be held on July 09, 2014. In furtherance to the same, the Company has issued a consent solicitation memorandum and an information memorandum each dated June 17, 2014, providing further information in relation to the commercial terms of the proposed restructuring of the Existing Bonds, including the terms and conditions of the new foreign currency convertible bonds (FCCBs) (the “Restructured Bonds”). Suzlon has received approval of the Corporate Debt Restructuring (CDR) Empowered Group for the debt restructuring proposal and has also received approval of the Reserve Bank of India (RBI), subject to specified conditions. The restructuring proposal, including the terms of the Restructured Bonds, is subject to the approval by the requisite majority of the holders of the Existing Bonds in each series.
