NIFTY EPS AND PE MISCONCEPTION.......

[5:17 PM, 4/28/2019] Jiten Patel: Today I am going to draw your attention once again to the correlation between Nifty EPS earnings and PE for FY 2019/20......

Current Price......11700

Actual Current EPS.....400

Actual Current PE.....29:35

Current price.....11700

Long term Average EPS....620

Long term Average PE.....18:85

Now if you notice there is a huge difference between the Actual Current PE and EPS earnings ....as compared to its Long term EPS earnings and PE.....

Today the Actual current EPS is lower than its Long term Average EPS earnings......

Now you must be asking why is there so much difference.....

 

okay now let us solve these riddle......

As per today's current scenario there are 50 companies in nifty.....and these 50 companies EPS earnings contribute to form the base of nifty EPS earnings.... the average of the all these companies EPS earnings  gives us  EPS earnings of nifty.....

So.... now in current scenario out of 50 companies some are doing exceptional well and their EPS earnings are constantly going up year to year..... some companies are growing at a slower pace and their EPS earnings are also growing slowly year to year.....

But the last lot out of these 50 companies are mostly running in losses and so their contribution to Nifty EPS earnings is absolutely zero..... example banking sector....SBI.....AXIS BANK.... ICICI BANK..... BANK OF BARODA......

now the contribution of these big corporate banks to Nifty earnings is absolutely nil.....I mean Zero.....

Now just imagine within the next one year all these Banks will resolve the NPAs problem and start making huge profits.....and from lose making they will all come in to profits.....

How much EPS earnings will they start contribute to Nifty EPS earnings.....

As soon as the  corporate banks come in to profits and they start to contribute to the Nifty EPS earnings ..... The Nifty EPS earnings will Zoom and Skyrocket...... from today's mediocre levels...... and sooner or later it will catch up with its Long Term Average EPS earnings and also if the economy starts booming than the Nifty EPS earnings will go way above its long term Average EPS earnings.......

[6:13 PM, 4/28/2019] Jiten Patel: The Spring of Nifty EPS earnings from last 5/6 years is Pressed and Compressed very heavily...... Sooner or later these Nifty EPS earnings Spring will be let loose..... Imagine the velocity with which it will Bounce back and how much greater Bouncy will follow thereafter........

As per my understanding the days of Nifty EPS earnings spring getting loose are very very near......say maximum in one years time you might start experiencing it......