• 13 hours Can The British Pound Overcome Brexit?
  • 19 hours Is A Gold Breakout Near?
  • 2 days Federal Reserve Downgrades U.S. Growth And Cuts Rate Hikes
  • 2 days Disney Beats Out Comcast In $71.3B Mega-Merger
  • 2 days The Feds Continue To Prop Up Equities Markets
  • 2 days Bejing's Sway In South China Sea Is Fading
  • 3 days Saudis Eye Billions As Stocks Get Emerging Market Boost
  • 3 days Airbnb In Acquisition Mode Ahead Of IPO
  • 3 days Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 3 days Champagne Sales Slow As European Economic Worries Grow Louder
  • 4 days Putin Signs “Digital Iron Curtain” Into Law
  • 4 days Russian Metals Magnate Sues U.S. Over Sanctions
  • 4 days Tesla Looks To Jump Into Indian Market
  • 4 days Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 5 days Homeowners Experiment With Risky New Investment Trend
  • 5 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 5 days De Beers To Expand World’s Most Profitable Diamond Mine
  • 5 days Ford CEO Gets Raise After Massive Layoff Round
  • 6 days Germany’s Flirtation With Recession Could Cripple The Global Economy
  • 6 days Where To Look As Gold Miners Inch Higher
Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

The Chatroom Cartel Running Global Bond Markets

The Chatroom Cartel Running Global Bond Markets

Eight major banks have been…

  1. Home
  2. Markets
  3. Other

Why I am Bearish Long Term on the Nifty?

First and foremost the Nifty is way overvalued at current levels with a trailing P/E in excess of 23. Have a look at Sanjay Jaiswal's comprehensive P/E computation below at Niftypulse. This makes the market way overvalued on an earnings yield basis:


Nifty P/E Ratio

Date

P/E

8/7/15

23.18

7/7/15

23.59

6/7/15

23.62

5/7/15

23.52

2/7/15

23.40

Next FII interest in the Indian market has been declining steadily over the last 3 years. Here is some data from Traderscockpit:


Yearly FII Purchases/ Sales (INR 10 Million):

Date

Gross Purchase

Gross Sales

Net Purchases/Sales

2015

651299.9

631312.0

19987.861

2014

1001752.4

928095.94

73656.42

2013

758407.75

671048.94

87358.79

2012

633960.4

532794.25

101166.11

A continuation of this trend could eventually weaken the Rupee significantly and destabilize the macro economic back drop in India.

USD/INR (USDINR=X)

Thirdly Indian market volatility is on the rise. However on the most recent bounce in the market it declined below US market volatility which suggests complacency and a large decline ahead in the mark. See the graphic below from Vix.co.in for a rounding bottom type pattern emerging in the India Vix which is bearish for the market in the long term:


Larger Image

Last but not the least the Chinese authorities seem to have lost control of their market which has resulted in a free fall. Contagion risk to other BRIC countries like India is likely:

iShares Trust - iShares China Large-Cap ETF (FXI)

 

Back to homepage

Leave a comment

Leave a comment