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Viewing report
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Alpha India Indices - The P/B Down Cycle?
Orpheus Capitals, Sep 2011, Pages: 6
The P/B down cycle?
Markets are interconnected because money and information flow is seamless. Yesterday morning we looked at global markets for fundamental rankings based on Price by Book ratio. 75% of the market was under water in Romania, 6% of DOW 30 was under water and Guess what’s the score for India? 46 out of the 50 NIFTY components (92%) have a P/B ratio greater than 1. As a risk parameter this tells us something similar to what our half yearly rankings told us. High performance ranking of Indian indices reflects well in P/B rankings too. One might call it an India premium, but when 60% of market is above a standard valuation parameters we have an overvaluation skew. Reliance Communications, Reliance Infra, Tata Steel and Hindalco are the worst P/B valuations Hindustan Unilever, Hero Motors, Cipla and TCS are the top P/B rankers. Since performance is cyclical, a similar cyclicality should be seen fundamental ratios.
Jiseki has a confirming signal for Reliance Communications (bottom ranker), Reliance Infra (bottom ranker), Cipla (top ranker), TCS (top ranker). From an Elliott point of view, we are looking at a completing corrective b wave up which should hold 5,200-5,350 resistances. This again confirms our negative market bias and is in sync with the P/B overvalued situation. Enjoy the latest Alpha India.
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