If you think no one can tell what should be the value of SENSEX think twice.
Market is driven by 2 things - fundamentals and investor risk aversion. Sometimes, fundamentals dominate the latter(like in financial crisis) other times, latter dominates.(dot com)
But one can always calculate the intrinsic value of SENSEX estimating the FCFE of underlying stocks. I did this last week and published it on other thread, but thought people in this thread may want to look at it. Well, the estimated free floating market cap of SENSEX is 9.7 trillion and the current free floating market cap is 12.7 trillion. I am using free floating because thats what is used to calculate sensex. For complete methodology and detailed report you may want to visit this thread:
http://www.traderji.com/fundamental...alued-14-10-fundamental-valuation-sensex.html
Of course, as I always say fundamental valuation is good as long as market gets it, and it holds good for this too. But it can always be used as a reference for investment strategies.
Actually, as a followup i will soon be posting what sectors in SENSEX are over/under valued to give you a sense whats contributing to this overvaluation.
Reply
First of all thanks very much to provide such a valuable information :clapping:
You Said
(1) If you think no one can tell what should be the value of SENSEX think twice.
Ans-: if the estimation of Sensex valuations will be near by likely
hoods then its possible (By making various stastistics if you
want 100 % accuracte result then its impossible.
if you find then you can see
so many parameters were
used by goverment to estimate future industrial growth or
else but how much accuracy they used to get its very much
depend upon those variables those are vital for the calculations
We all know that Botton means always zero but realisticly at what extend This market can go
For this Just see attached file for Bottom Analysis
View attachment 13365
feed data in attached file format then applied Statistics probability with so many possibilities and get one answer out of crores possibilities for this you will be required a super fine computer system.
Then You can reach a near by destination as govrment finds & make it as
their near by lend mark.
When they will reach their near by position then they will analized it by huge
pressure at 2 three times & count the immovable fund positions towards
down side then fresh investment of all the big investors take plac.
These thing are as well as possible for higher valuations of sensex when you
will see that market fund positions are in particular range for a huge evel of
time then you can find big correction
(2) You said
Market is driven by 2 things - fundamentals and investor risk aversion. Sometimes, fundamentals dominate the latter(like in financial crisis) other times, latter dominates.(dot com)
Yes market is run by your above mentions things but so many crucial things
are
also important like Global environment & positive and negetive news with
respect to the script those can effect the sales or profitability of the
company. its very crucial.
(3) intrinsic value -:
Thats call the estimation statistics , like budget of any kind
(4) But my dear very important factor of the market is the chances of gainig
because out of 100 % free floating investment only 70 to 75 % used to
investment rest of the same was consumed in charges , scams else.
Thats why the range analysis of the market is very crucial.
(5) Do you know? Last years 12500 sensex valuations of scripts as compare to current valuations both are just near by then where apx 5000 points sensex is being consumed in charges , scam or in industrial development, are you finding any thing in cheap rates as compare to 2007,Means stock market’s money is not rotating properly
But as far as your calculation is concern, you are saying sensex is 14.1% over valued ,means what ever the data you are taking those are not enough to provide near by informations
Intellectually your estimation is good but seems to be very bookish
For making your
fundamental analysis more accurate you have to study India , American ,China's stock market model and its money's utilisation in realy market by analyzing so many factors like charges,scams,less rain,else,rate of corruptions else
Why China & us are very develop countries because they have much more accurate data base and they give proper control
over stock market money to flow in outer market.after doing all these from so many years now their market start to provide
very less reurn............and we are 3 step back then all these ones.
US is a capitalist economy, china is a communist economy but in India we are being with democracy as far as the utilization of Stock Market money in US & CHAINA is concern, they Can control it by their economy model at an extend that’s why you can see the rate of industrial development in US & CHAINA was utmost in last 100 years because they flow the stock markets money in real market and control the corruptions & increased long term productive system.
India is a democratic country that’s why they require different model of stock market which is based on long term vision as per current model stock market's money is not flowing in real market properly due to this actual rate of inflations is going to be increased day by day & corruptions is breaking one after another record.
So dear for finding near estimations,
country need cortrol over all kinds of corruptions and very less brokerage system are needed.Then over market can reach a level of "us or china" where they are at present.
This will provide the flow of money in outer market properly & estimation of rate of inflaction will better as compair to
current time .
If this is not possible then a certain change is needed in current stock market model as a public stock market for long term
vision where money inflow and out flow will be fully calculated.
So dear add all require variables to accurate your estimations
Its my thinking if you like then take the same or just forget