market momentum faltering ?

Agilent · #21 2nd December 2006, 11:22 PM

Interesting ... and while you compose your next post, try give some thought to other ratios whcih could be analysed in conjunction... notably the Put Call Ratio

After all, mere FnO volume trends could be misleading if, say,the PC ratio is rising sharply rather than falling : there could be varying interpretations

AGILENT

kkseal · #22 3rd December 2006, 12:49 AM

Continuing from my previous post ...

I wasn't being the least bit sarcastic when i mentioned 15/16k. 15-16k was plausible for me even in May (only more so now) This is why :-

In May the EPS (of Sensex companies) was around 570 So even a modest (compared to prev yrs) 20% gowth in earnings would take the current yr EPS past 700. Even with the peak PE remaining at 21+ 15k would be well within striking distance by May '07. Also I felt a 10% upward revision of valuations was something the Indian mkts could legitimately, justifiably claim after the stellar performance over 3 yrs (proving it's not a fluke) That would take us past 16k. (As things stand now the EPS would probably be closer to 750).

But in May there were 2 big concerns :-

1) Whether the liquidity would continue to remain buoyant Whether the FIIs would continue to pour in money at the same rate Whether mutual funds would be able to continue garnering money from retail investors after the May drubbing. This has obviously proved to be a false alarm.

2) The possible slowdown in the US and it's cascading effect on the Global Economy. This concern remains (there have been some disturbing if not -as yet- ominous signs of late).

Even at PE of 23 the mkts are fairly valued if you consider the earnings growth. Even sticking to my modest fig of 20% (let's consider it a 5-6 yrs avg) the PEG (price-earnings-growth You could think of it as the projected PE) comes to 1.15 (23/20). Now the overvalued range for PEG is 1.3-1.5 & beyond So even on the basis of a 20% avg growth rate fig the bull cycle should peak at PE nearer 30.

Till then, hail the bulls!

Cheers,
Kalyan.

kkseal · #23 3rd December 2006, 01:31 AM

Quote:

Originally Posted by Agilent

Interesting ... and while you compose your next post, try give some thought to other ratios whcih could be analysed in conjunction... notably the Put Call Ratio

After all, mere FnO volume trends could be misleading if, say,the PC ratio is rising sharply rather than falling : there could be varying interpretations

AGILENT

Right. The name of the game is confirmation (with the final decisive one coming only from actual price/volume movements) You cannot rely on any one indicator/ratio (an indicator is just something giving an indication of a possible event/outcome & not a holy grail).

BTW when u talk about the 'varying interpretations' the PC ratio can have i'm sure you have something in mind. Would be interesting to know what the interpretations might be.

So spell it out pal! Let's discuss it more fully. That's what a forum is all about!!

Cheers,
Kalyan.

Agilent · #24 3rd December 2006, 11:26 AM

Quote:

Originally Posted by kkseal

BTW when u talk about the 'varying interpretations' the PC ratio can have i'm sure you have something in mind. Would be interesting to know what the interpretations might be.

So spell it out pal! Let's discuss it more fully. That's what a forum is all about!!

Cheers,
Kalyan.

I am not an expert in derivatives ... there are members who are much more enlightened.

One thing I do know : interpreting PC ratio is v. diifficult, and should be done only in conjunction with other trends

See for example this which elaborates on this complex phenomenon
http://www.safehaven.com/article-1612.htm

Lets both give this a good read and revert. Meantime, if u have stats on the PC ratio in recent months or weeks, let me know . We can dig our knowhow together, with help of course from experts here

AGILENT

jaykiru · #25 3rd December 2006, 11:48 AM

Quote:

Originally Posted by Agilent

I am not an expert in derivatives ... there are members who are much more enlightened.

One thing I do know : interpreting PC ratio is v. diifficult, and should be done only in conjunction with other trends

See for example this which elaborates on this complex phenomenon
http://www.safehaven.com/article-1612.htm

Lets both give this a good read and revert. Meantime, if u have stats on the PC ratio in recent months or weeks, let me know . We can dig our knowhow together, with help of course from experts here

AGILENT

Hi Aligent,
Thanks a lot for safehaven .com

Jay

Agilent · #26 3rd December 2006, 12:47 PM

Quote:

Originally Posted by jaykiru

Hi Aligent,
Thanks a lot for safehaven .com

Jay

You are welcome , Jay

The name is Agilent (as in agile + vigilant ) not Aligent (as in alligator)

No offence !

AGILENT

amitt29 · #27 3rd December 2006, 01:13 PM

Offtopic though interesting,just see how a mis-spelt word and misplaced words (in a sentence)can attribute different meanings to the same thing.

Just yesterday in the chatroom i saw an example for this,so i took it up here.
Regards
Amit.

jaykiru · #28 3rd December 2006, 02:17 PM

oops... Sorry Agilent..

aca_trader · #29 3rd December 2006, 02:51 PM

Quote:

Originally Posted by kkseal

Another thing to watch out for is the level of leveraged positions in the mkt. I use the NSE F&O/ NSE CASH turnover ratio to get a fair approximation of this (any better way?)

Thanks
Kalyan.

Hi Kalyan!

Can you please explain how this ratio is linked to leverage?

Thanks & Regards,
--Ashish

Agilent · #30 3rd December 2006, 03:35 PM

Quote:

Originally Posted by aca_trader

Hi Kalyan!

Can you please explain how this ratio is linked to leverage?

Thanks & Regards,
--Ashish

Hi Ashish,
I had wanted to ask the same question.

I think leverage as he uses it is not to be interpreted literally (as in borrowed funds : own funds) but otherwise.

What he probably means is : options magnify gains and losses (compared to cash markets) just as leveraging onself does. Thus FnO volumes as a mutiple of Cash volumes, is a good proxy to leverage.

Am I right KKS ?

AGILENT

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