OPINION: If Gravity of Stocks Is Index, Than INDEX = P/E * Earnings, Right?
Nifty gained almost 11.07% from lowest of the budget day to till now. Not just Nifty but all over the world indices gone up as same. But I could not understand is there any fundamental behind this up move? We are living in high leveraged world, and this kind of up move, is there any trap or what?
As per me, indices means reflecting earnings of the stocks and if we had came down because of the growth issues. Than what is the reason behind this fast up move in all over the world’s markets? As per me March is the month, in this month no any big results announced in all over the world and because of the lack of confidence in markets, big positions were in shorts and because of that sellers were trapped, and it was very easy to change the trend. Always manipulations are easy in this kind of situations with low risk.
World is sitting on high leveraged right now, China is reflecting slower growth and trying to survive so devaluing currency which is indirectly pulling down currencies of all over the world. OPEC and Russia are trying to survive from lower oil prices. Japan is trying to survive from negative interest rates and deflations. Governments are supportive to capitalists and central banks are supportive to governments and capitalists had created huge bad debts and leverage which can dangerous for common public of all over the world. All central banks are doing whatever is not impacting as per their expectations, because they wanted to bail out all leverage by injecting money in systems on threat of recession. Tax payers’ are paying money for these are all bail outs and stimulus. The leverages in system are creating panic and there is a scenario of crisis in everyone’s mind. This can be bust at any point of time. Because of this panic I would like to suggest all nations to make a leverage index same as like volatility index and other indices on their exchanges, which will indicate all the leverages in the system. But indices are manipulated, than how will this not? But something will be to prompt the common public.
Coming back to India, I strongly believe, if FED will not hike interest rates again in this month, (I am expecting 70% chance of interest rate hike of 15 to 25 bps in this meeting of March, because data is supporting that and as per FED market is ready for that (as per Dec-2015 statement)) April month will be the month for big sell-off in all indices in world markets. As per NIFTY prospective current NIFTY P/E is around 20.35 as on 14th March and closed was at 7538.75 (Supports at 7440 & resistance is 7580), means Nifty earning is around Rs. 370.45. Because, if all companies can’t deliver good set of numbers and numbers will reflects any de-growth than it will be impact the P/E, prices and indices. I hope so, gold will be the safe haven and “Cash is King” scenario will be best for sometimes.
Take care of your investments and hopping all will be fine as ‘All’s Well’.
Take Care & Regards,