Inflation Ensures Nifty is Nowhere Close to All Time High In “Real” Terms

By |October 18th, 2014|

You know how much inflation eats into your returns? This much: Adjusted for inflation, the Nifty is 10% lower than the highs we saw in 2008. Although the Nifty has moved 30% higher than the 2008 levels in “absolute” (i.e. not inflation adjusted terms). We take the Nifty (including the impact of reinvesting dividends) and show you how inflation has made all the difference:


Turns out that despite the recent drop in Gold price, the best return in inflation adjusted terms is in the shiny metal since 2007. However, if you had bought after September 2012, it would’ve given you lousy returns.

We map the growth of Rs. 10,000 invested in Gold, Public Provident Fund (PPF) or the Nifty (assume reinvestment of divideds) PPF is the second best, which still lost money in absolute terms. The Nifty’s […]

Nifty Snapshot: At 5% From Peak, We’re Not In A Correction Yet

By |October 18th, 2014|

The Nifty continues to “correct”, although it did rise marginally today.  The recent Nifty “peak” about 8173 has come after a long ride up.


(Click for a larger image)

This chart maps all the retracements that are 10% or more. You can see here that we haven’t had a 10% retracement in the last full year – and we have had at least one a year since 2007. It’s really a very non-volatile market.

The market’s at a 20 P/E which is not overvalued but is definitely not fair value either.

Even with the recent fall the Nifty’s just 5% below the peak, which is incredible because it has been the biggest retracement in the last year. And, after March, this is the first time we’re trading below the 50 day moving average.

A correction […]

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Premium: The “Crash” is Not Yet One. The Data Isn’t Yet Bad Enough.

By |September 25th, 2014|

CapM Premium Header

As we write this, the US Markets have fallen 1.5%, with the S&P going considerably below 2,000. The Indian stocks listed in the US markets too have fallen between 1% (IT) and 5% (ICICI Bank)

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Monthly Moves: 4 Consecutive Wins as Nifty Moves 3% in Aug, 26% return in 2014

By |September 1st, 2014|

In another fantastic month, August gives us a 3% return on the index, which closed near 8,000 (Nifty). This is now four consecutive up-months.


On the Sensex, the streak runs to 7 months, with only January showing a negative number.


The indexes have moved 26% in 2014 till August. Such great times!

Nifty EPS and P/E Chart: EPS Growth Dips to 10%

By |August 25th, 2014|

Nifty EPS Growth drops suddenly to 10% in the last few days. The trailing 12 month P/E (non consolidated) is at 20. This kind of thing happens a lot; but it’s remarkable that for the last seven years, our P/E ratio never went below our EPS growth rate (trailing).


Even the five year compounded growth rate on EPS is still at 11.4%, which is quite low considering these are the top companies in the country.

We’re at all time highs on the index, but EPS growth doesn’t look quite that attractive. One of these days I will do the hard work of getting consolidated EPS numbers and tracking growth over time.

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Adjusted for Inflation, Nifty Still 15% to 35% Below All Time Highs

By |August 11th, 2014|

When you adjust the Nifty for inflation, you might see how high the Nifty really is in comparison with the past. That is, even with today’s Nifty value at all time highs, is it really an all time high if you considered the value of the rupee has fallen due to inflation?

Looking at the Nifty (with reinvestment of dividends) since 1999, we can use a single reference point and adjust all numbers for inflation. If we look at the numbers, both raw and adjusted, here’s what the graph looks like:


(Data only till July 2014. July 2014 assumed to show inflation of about 5%, WPI Used)

In order for our current high to reach the all time high, it has to cross 5015, which is another 15% away from here.

In fact, […]

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Monthly Moves: Nifty and Sensex do 5%, YTD Return Crosses 20%

By |June 30th, 2014|

June turned out to be a pretty good month for markets. The Nifty went up 5.3%, and ended above 7600.


This takes 2014 to a +20.7% year to June, the second best in the last 15.


And the Sensex did pretty well too, with a +4.9% in Jun 2014


Lack of -4% Moves Makes For Calmest Nifty in 5 Years

By |June 16th, 2014|

How volatile markets were and how little they are today is visible on a graph of large moves. How many times has Nifty fallen 4% in a single day? 66 times.

How many times since 18th August 2009? Twice.


There has been calm. And this is true of world markets.

The storm, though, is ahead of us, and when it comes, it will seem to be a “black” swan. But if you are a student of history, the volatility is just about waiting to happen.

Two Events That “Shook” Markets but FIIs Bought 1100 cr. of Stocks Today

By |June 13th, 2014|

Two things have happened recently that have produced a small scare.

One, that Mark Carney, governor of the Bank of England, has said interest rates could rise sooner than markets expect. British rates are 0.5%. But they have a housing bubble going on, even as the economy is recovering. These point to the fact that rates will have to be increased as things continue to improve, and to avoid asset bubbles – and sooner than anticipated.

Second, that militants in Iraq are advancing dangerously, taking over entire towns without much of a fight. Brent Crude has shot up to $113, which is a $7 jump in a very short time. This impacts everything – the fiscal deficit (greater subsidy), oil companies (bigger losses due to underrecovery share of loss) and industry (higher cost of power).

The Nifty fell 1.4%, the midcap index fell 2.76% and the […]

Sell in May and Go Away Except When It’s A Darn Good Year Already

By |June 2nd, 2014|

The Nifty, Year to Date, till May has had the second best return since 1999, eclipsed only by the stellar return in 2009.


Will it sustain?

In most earlier years that have seen more than 10% returns YTD in May, the momentum has sustained – 2009 ended up 40%. The years  1997 and 1999 ended up even higher than their May returns. 1996 was the outlier, starting at +20% in May and ending up -1%.

Maybe you shouldn’t Sell in May and Go Away.

Errata: The 1996 returns have been corected- bad excel magic! Thanks to Kora at @paststat for recognizing this.

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Monthly Returns: Best Month of 2014 at 8% in May

By |June 2nd, 2014|

Great Election month on the Nifty. Nothing like 2009, of course, which has a 28% green number that might not be repeated in the near future. But still, 8% for the month, and a +14% number for the year.


And on the Sensex too:


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Nifty Uptrend Lasts 254 days Without 10% Correction, Second Longest Ever

By |May 12th, 2014|

It’s a new high! The Nifty crossed 6850 to make another new all-time-high. Here’s some key metrics, in a single chart:


We haven’t seen a 10% trend change for a very long time. Look at the trend graph:


This is constructed by calculating whenever the Nifty falls 10% from the last high or rises 10% from the last low. (The excel bit is complicated.)

What’s interesting is that the current trend is about the second longest trend in the last eight years.

However, it can easily last longer. The previous uptrend was nearly 450 days, while the current one is only 254 days (without a 10% correction).

Will you bet […]

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Nifty EPS growth at 7%, P/E at 19

By |April 29th, 2014|

After many results have come in, the Nifty EPS (earnings per share) calculated on a standalone basis is at Rs. 355.


This has moved from a base of Rs. 209 five years ago (after the crisis of 2009-09) at a pace of roughly 10% to 11% per year.


While this is exciting to see the 5 year growth uptick to 10%+, it remains too low by our own historical standards. Much of the recent uptick has come because of replacing loss making companies (like Ranbaxy) and replacing them with profit making ones (like Tech Mahindra).

The standalone P/E – the Price to Earnings Ratio – of the Nifty is […]

Goldman Sachs’ Nifty 7600 “Target” is Just a Load of Bull

By |March 18th, 2014|

Markets supposedly went up today because Goldman Sachs upgraded India and told the world that it expects a Nifty target of 7,600 for 2014.

When you hear this, you think that Goldman Sachs drives our market. I think they largely pick figures up from where the sun don’t shine. It has NO idea where markets will actually go, so let’s look at its past “estimates”.