An effort to remind once again….

An effort to remind once again….
In my earlier post titled… The BEST chance to overcome…dt 25-08-08…
The markets are consolidating at this stage where the Nifty made some anchor at 4200-4300 level.
The markets very likely to move further to 5100 level if it trades above 4500 level (with out touching 4080-4100 level) which is very crucial resistance to cross, other wise the markets likely to see one more deep correction that could take back first to 3500 level, later to 3180-3130 level, if worst case developed then to a level that was available at 2940-3040 range, came in the last week of July-06.
The July, 2006 levels may not come to Nifty as it undergone a series of changes in the composition, higher capitalization stocks like DLF, UNITECH, Power Grid, now the Rpower being included by 10th Sep-08.
The Indian markets are taking the earlier lead while falling and even in the rise, but the global crisis may not let it move in unidirectional up move. At the current valuations, the age old thumb rule method of identifying the stocks like P/E is still high at 18.25 as per NSE, when compared to the historic movements.

Today the Economic Times covered with a title as ….. Nifty hit by poor choice of members (1 Nov, 2008, 0149 hrs IST,Apurv Gupta & Krishna Kant, ET Bureau)…..reads…..
The frequent changes in benchmark indexes and the inclusion of stocks like Reliance Power, Suzlon, RPL, Unitech and DLF while at the same time excluding large companies with a stable earnings and dividend record have brought the benchmark index down to its knees.

Experts say that in such situations, where the index has crashed due to an abnormal fall in certain stocks, it becomes meaningless for investors to look at the index levels or compare its ratios such as PE with indices in other countries, especially when some of the index constituents have no earnings at all to talk about……………….
………. For example, if we take the same constituents of the Nifty as at the beginning of 2006, the index would have been ruling higher by about 230 points from its current level. In fact, the Nifty would not have even fallen below 2929 points compared with its actual close on Wednesday at 2697 pts. Similarly, if the Nifty composition had been the same as in early 2007, the index would not have broken through the 2900-mark…………..