Some Statistics

Looking at the way market is heating up, I would like to provide how odds stack up against investors at current valuations. In the data available for Nifty from January 1, 1999 till 1st Dec 2008 (yes, this is 2008, since I don't know what returns Nifty gives from 2nd December 2009 onwards), the following observations can be made:

• There are 721 days out of 2485 total days when Nifty settled above a P/E of 20. The next one year returns from Nifty averaged -8.5%, lowest -56.8%, highest 65.7% and median -14.5%.
• There are 222 days when Nifty settled below a dividend yield of 1%. The next one year returns averaged -25.6%, lowest -56.8%, highest 26.4% and median -21.0%.
• There are 1438 days when Nifty settled above P/B of 3.5. The next one year returns averaged 8.18%, lowest -56.8%, highest 89.95% and median 6.76%.
  

These statistics show that except P/B, other statistics do not favour investments in Nifty at these levels.