Tit bits

Like everyday, I would like to begin by speaking about the difficulties I'm facing due to the new user  interface (UI), Google has created for the bloggers. This is precisely because of this reason, that often I don't feel like updating this blog. 

Meanwhile, the BSE Sensex closed at 49,624.76 down 167.36 points (-0.34%), while the Nifty closed at 14,590.35 down 54.35 points (-0.37%).

This rally in which both Tata Group and RIL played an active roll looks to me, stage managed before the Bengal Elections to give a feel good factor.

Or else with NIFTY50 PE of 39.41, NIFTY50 PB of 4.13, NIFTY50 DIV of 1.09 and NIFTY50 EPS of 370.2, can't trade at this valuations.

But before I speak further let me discuss a bit about the P/E, so that you understand the term in a more secular way. 

ROI (Return on Investment) in investment is calculated by the return it would generate in one year time frame, which is also known as PE or Price to Earnings.

PE is the price that an investor is ready to pay to earn Re.1 each year.

Eg: f you have invested Rs.100 in a FD which is giving you an interest of 8%, per year, then at the end of the year you would get Rs. 8, isn't it?

In other words, to earn a return of Rs. 8, you need to invest Rs. 100 or to earn Re. 1, you need to invest Rs.12.5 (100/8). Therefore, the PE of this bank's FD is 12.5.

Conversely, if the interest rate had been 12%, the PE would have been 8.33.

Conclusion: If PE is low, you expect higher return and if PE is high, you expect lower return. This applies to our Nifty and Sensex, as well, apart from the stocks of companies.

Now coming back to the main topic: in March 2000, the SENSEX reached to 30 & then came back to 13 in Jan 2002. In 2007 it was again closed to 29 & in starting of 2009 it went close to 10. Average Sensex PE from 1990 to 2010 remained close to 18. 

We have already seen that in 2000 & 2007 it was close to 30 & in 1994 it even touched 50  before it came down.

Caveat: In Bull Markets many over optimistic investors like Rakhesh Jhunjhunwala or Porinju Veliath might speak of a 20% forward P/E, but that could be misleading as the world is still grappling with the Covid-19 catastrophe and we are having an eccentric - tyrant as the PM, who is already carrying a baggage of failures under his belt - - the man who institutionalised Fake News and Bluffing. 

Therefore, I feel the Sensex should slowly come down below 30,000, when fresh investments can be thought of.

#The shares of 3i Infotech Ltd (Rs.7.75) crashed to Rs.7.70, intra day, yesterday. I had asked the investors to exit the scrip on last Friday. I hope all my clients and blog readers are out of this share. This call is closed.

#Sell the shares of Adani Ports and Special Economic Zone Limited (Rs.550) at the CMP in the F&O segment with a short term target of Rs.447. SL: Rs.592. It has already reached the targets of most analysts, which is Rs.500. With a Face Value of Rs.2, TTM EPS of Rs.18.89,.Book Value Per Share of Rs.126.38 and Dividend Yield of only 0.58 at the CMP of Rs.550, the scrip doesn't look for a crying investment bet.

#You will get lot of such information, if you join my CROREPATI SCHEME with a minimum seed capital of Rs.2 lakhs. This is not a PMS offer but a guide to generate stupendous returns, over a period on the money invested. There will not be any F&O call or margin trading, making the issue a more or less safe bet. However, as mentioned earlier, the theory and the algorithm behind the scheme can't be disclosed.

Those who have sent me mails earlier (at: suman2005s@rediffmail.com or sumanm2007s@gmail.com) kindly give me a little time to reply, as I'm too occupied at the current moment. But one request kindly don't flood me with spams and just inquisitive mails, as I don't have too much time at hand - - I expect mails only from persons with genuine interest in equities...