Indian Market: Statistical Valuation
Indian Market: Statistical Valuation Nifty has corrected around 6% from the top but stocks has corrected some 10-50%. There was clear divergence between Nifty performance vis a vis small cap and mid cap performance in last 7 months that itself was warning sign. Small cap and mid cap has been correcting from quite sometime while nifty was moving upward. Again and again market give lesson that unless broader market is healthy, index can not move. The present correction is happening because valuation of Indian equity (as per my understanding) reached to level where margin of safety is completely missing. Of course, there is always opportunity for stock picker in the market but when broader index correct, all the stocks feel the heat so impact the market all across. I am using some statistical tools ( it is not perfect) but helpful to understand overvaluation or undervaluation zone of the market and historically worked well so believe it will work in future as well fo