Nifty Fundamentals Revisited

The Market isn't Galloping Away, Why ? 

Indian stock market seems to be in the threshold of a correction after going through a strong rally. This rally   raised the stock prices to very expensive levels on the back of  the relentless FII buying helped by the cheap overseas money and a rising Rupee. On a point to point basis, both the major stock indices, Nifty and BSE Sensex have not been able to surpass their intraday highs of January, 2008 in the recent rally. This post attempts  to take a look at the reasons for the non-performance of the stock market  in the entire past three years from the point of view of the trailing fundamental valuations. 

Indian Stock Indices - All Time Highs

The above table shows the all time highs of Nifty futures, Nifty Index and BSE Sensex during the period. The table shows that new closing highs were achieved during the recent rally. Now, let's make a comparison of the trailing fundamental valuations of the S&P CNX Nifty Index at these market tops.

Nifty Index - Trailing Valuation Comparison 

Update on The Ultimate Momentum Signal - 19th Nov. 2010

Nifty Futures Rebound From Support at 5940 - 5950 !!! 

Just as this blogger had written in the last post titled "Nifty Futures Approaching Support at 5940 - 5950" , Nifty futures rebounded from the support area on Thursday. The Asian markets were trading with positive bias as indiacted in the previous post when the trading opened in the Indian markets on Thursday. However, a bout of selling which came about in the banking stocks on the back of some doubts about the exposure to micro finance and real estate sectors lead to the Nifty futures' fall to the previously indicated support area. Depending on the entry point, the sell signals indicated at  6084 and again reiterated at 6134 levels have lead to maximum favourable excursions ( read possible profits ) of 169 and 209 points. Even if the positions were covered at the earlier widely known support at 5940, it would have yielded to net profits of  140 and 190 points.  Even if a trader would have strictly followed the system rules and set up the trading stop at 5049, against the short in Nifty futures,  even then  it would have earned handsome profits. And if a long position was established at the support at 5940  expecting the bounce as indicated in the previous post, it also would have gained another 100 points on Thursday itself.