US Market (Source: Gurufocus.com)
Indian Market
- For Indian markets, CAPE is based on 5 year rolling returns for the last 10 years
- Interestingly, Indian market is cheap relative to historical averages. Profit margins and RoEs are at 5 year low (excluding 2009 data). In effect both margins and multiples should mean revert under the right conditions
- What if US market corrects over the next 2 years? highly likely as P/E and margin will revert lower average numbers.
Its a tricky situation for the Indian investor given that 1) both markets are highly correlated and so are the trade flows and 2) FII flows will dry up. So if we dont our GDP and Fisc. Deficit. in order over the next two years, we will get yet another opportunity to load up on quality stocks for the long term
Staying defensive always remains the only option.
Indian Market
- For Indian markets, CAPE is based on 5 year rolling returns for the last 10 years
- Interestingly, Indian market is cheap relative to historical averages. Profit margins and RoEs are at 5 year low (excluding 2009 data). In effect both margins and multiples should mean revert under the right conditions
- What if US market corrects over the next 2 years? highly likely as P/E and margin will revert lower average numbers.
Its a tricky situation for the Indian investor given that 1) both markets are highly correlated and so are the trade flows and 2) FII flows will dry up. So if we dont our GDP and Fisc. Deficit. in order over the next two years, we will get yet another opportunity to load up on quality stocks for the long term
Staying defensive always remains the only option.
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