What next in Indian Stock Market ? Are we heading towards Crash ?


Staff member
First Question is How can we evaluate that Market is going to Crash or Boom ? We have only option that we compare current situation with past big crashes.

When we think about comparison first indicator we think about is P/E. Past History proved that whenever we have higher P/E we have witnessed big correction in market.P/E is Price to Multiple Earnings.

PE ratio is an indicator of the amount an investor is willing to pay to earn one rupee as profit.

Reference from Twitter
PE Ratio from 1999.

Above chart shows that whenever we have PE ratio greater than 25 there is big correction.

Another Indicator is Price Book ratio to evaluate index and stock.P/B ration less than 3 indicates markets are in value zone and a high P/B ratio more than 4 indicates expensive zone.