Wants to know why nifty falling and what would be target for 2019 to 2020. Read

NIFTY TRADING RANGE AS PER HISTORICAL DATA
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07 jan 2008: 6200
P/E: 28.25
EPS : 219
P/B : 6.54
Book value :948
Return on equity : 23.10%

02 March 2009:2620
P/E: 12.70
EPS : 206
P/B : 2.22
Book value :1180
Return on equity : 17.45 %

28 August 2018:11739
P/E: 28.66
EPS : 409
P/B : 3.82
Book value :3073
Return on equity : 13.30%

26 Oct 2018 :10030
P/E: 24.12
EPS : 416
P/B : 3.19
Book value :3144
Return on equity : 13.23%

In last 10 years nifty return on equity reduced from 23 to 13 and the reason is book value increased because nifty companies didn’t maintain dividend payout as was in 2008.
So book value increased 3 times but earnings per share didn’t increase with same rate.
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OVERALL nifty should trade around its return on equity between 18 to 20 P/E till March 2019.
Nifty can post eps around 480 with 13% growth rate and then it trading range would be 9000 to 9600.
Since stock market discount future earnings so with same rate @15% EPS for FY 19-20 comes around 552,if nifty trade @20 price to earnings then its target comes around 11040.
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CONCLUSION :Nifty can come till March 9000 to 9600 but again touch 11000 till March 2020.

Author: Atul Singh Stock Market Analyst

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