4 replies on “Time spent by Sensex at various P/E levels”
Hi.
Pls explain the chart.
The chart shows the % of time the index spends at a particular P/E level
Define X axis. Days/Weeks/Months … For how many years was this chart plotted? Last 1 year? 10 years?
@Vetti,
You are approaching the chart from a “market timing” perspective. I think you would like to know “how much time till the next correction/crash”. But think of this chart as a measure of time SENSEX spends at a particular PE level. So it only spends 2% of the time at 24x PE levels.
So if you take 100 randomly selected days only 2 days you will find SENSEX at 24x levels.
This should give an indication of how overbought or oversold SENSEX is (it is at overbought levels)
4 replies on “Time spent by Sensex at various P/E levels”
Hi.
Pls explain the chart.
The chart shows the % of time the index spends at a particular P/E level
Define X axis. Days/Weeks/Months … For how many years was this chart plotted? Last 1 year? 10 years?
@Vetti,
You are approaching the chart from a “market timing” perspective. I think you would like to know “how much time till the next correction/crash”. But think of this chart as a measure of time SENSEX spends at a particular PE level. So it only spends 2% of the time at 24x PE levels.
So if you take 100 randomly selected days only 2 days you will find SENSEX at 24x levels.
This should give an indication of how overbought or oversold SENSEX is (it is at overbought levels)
Hope it helps!
Thanks
Soham