Nifty: Hurst’s Time cycles and its pressure on markets with PE ratio!

Time cycles is an independent study in Technical analysis which if applied prudently can help to pin point turn to the day or probably to the hour.

We combined Advanced Technical analysis concepts like Advanced Elliott wave, Neo wave and Hurst’s Time cycles with Gann projections to derive high probable trade setups and the path markets can follow.

Now look at the below chart of Nifty which was published in our Monthly research report on 6th June 2017:

Nifty Gann projections and Time cycles chart (data as per 6th June 2017)

Happened so far

Nifty PE ratio

Following is part of the research from Monthly research report

Time cycles: In figure 5, we have shown Time projections along with Gann price projection. As per Time cycles prices have entered into the topping zone again and is now ……. days old within the 55 days cycle. Therefore the pressure can start building up on downside after few days as per cycle analysis. However, we know time is a dynamic element and prices can stay at elevated levels………… So break below …….. will be 1st level of negative confirmation…

Indian Equity markets valuations: At times it is important to look at certain parameters which provide information about how expensive the current market is.  Price to Earnings ratio (P/E ratio) is widely used fundamental parameter to evaluate the current price with respect to earnings of that asset. We can see in Figure 6 the PE ratio of Nifty. For us PE ratio can be classified as technical parameter as well. Any PE reading will make sense only when it is compared against its average of past decade. We can clearly see that for Nifty the PE average had been at 19 against which Nifty is currently trading at the PE of 25. Also we can see that important tops are formed when Nifty PE crosses above the 2 standard deviation from the average. We can clearly see that the top of 2008, late 2010 was formed when PE ratio crossed above 25 mark. It is not very often to see Nifty PE entering into such zone and when it happens it is time to stay alert and avoid fresh investments unless the earnings catches up with the prices. Even for Earnings to improve prices should stay where they are for a few quarters so that the PE ratio can come down. This means that there should be atleast time correction if not much of price to improve this fundamental parameter. Let us look at the PE ratios of other few important sectors and see if this euphoria is more prominent in those indices.

The above research only shows Nifty valuations. In the actual research report –The Financial Waves short term update you can see the valuation parameters on Bank Nifty and Midcap indices as well that are at never seen before levels. Not only that there is very detailed explanation on Neo wave analysis along with preferred scenario from medium term perspective with outlook on Global markets, EURUSD, stock pick of the month and much more. Subscribe NOW and see yourself detailed analysis on Nifty and how precisely markets are moving!

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