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What is P/E ratio and How to Invest According to P/E ratio ?

Investment done at right time and at right price creates very good wealth for the future. If you don't invest at right time, you are likely to suffer heavy losses on your hard earned capital.

P/E ratio also called as Price to Earnings Ratio is a very good tool to predict the best time to invest in share market to get maximum profits on your investments.

P/E Ratio.

A1 INTRADAY TIPS has explain the term what is P/E ratio. The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share price to the company's earnings per share. For Detailed information please visit - P/E Ratio Simplified

Nifty P/E ratio and How to Use this to time your Investment in Stock market.

Nifty P/E ratio means the Price-Earnings ratio of Nifty 50 stocks. According to historical data The range of PE ratio has moved from 12 to 30. Current PE ratio can know on daily basis from the NSE website. The relativity of P/E ratio with Nifty 50 stocks. When majority of stocks are at all time high level then the PE ratio would be near between 26 to 30, Same way when majority of stocks in Nifty 50 are falling and moving towards all time low the PE ratio should come down to 12 to 15.

P/E Ratio of NIFTY-50 at A1 Intraday Tips

Chart showing P/E Ratio of NIFTY-50.

How to Invest According to P/E ratio ?

Below, We have listed some very important points, which will help you to take best decisions for investment in Nse Market.

  • P/E ratio 23 to 26 : If P/E ratio is running above 26, We advised you to Take Vacation from Stock Market and stay away from stock market.
  • P/E ratio 20 to 23 : If P/E ratio is running between 20 to 23, Start to Short List your best stocks for Investment.
  • P/E ratio 17 to 20 : If P/E ratio is running between 17 to 20, Start Investing may be on SIP Basis. Also Keep Cash Ready to Invest.
  • P/E ratio 17 to 15 : If P/E ratio is running between 17 to 15, Increase Investing, This is the time to Increase your investments.
  • P/E ratio 15 to 12 :. If P/E ratio is between 15-12 Break all your Fixed Deposit Saving and Invest in Quality Stocks. This investment could give you better return in the future.
  • P/E ratio Near to 12 : If P/E ratio is running near to 12: This is Best time to Invest in Stock Market. Even you can Borrow and Invest in Equity Markets.

If we look at the Historic records of Nse movement, Our technical team has analyzed that NSE Market corrects itself according to its P/E ratio. When market started to fall at that time the P/E ratio was 28.67 i.e. on dated 13 Jan 2020. And now a days it the P/E is running at 17.2 on as updated on 23 March 2020. We don't think that PE should fall below the 12.

Information is wealth in NSE Stock Market.

Nifty is likely to find its bottom at P/E of 11-12x trailing earnings and we are still at 21x now. But the valuations are close to the bottom at 2.3x on a PBV basis!. If you have right knowledge of P/E ratio and if you use it, you can create lot of Wealth from Nse Stock market.

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