Why panic?
The sensex fell 300 points on 12th April and another 100 points on 13th April ... and people are saying all kinds of things. Some important facts -
> the market has gone down by just 3.44% over the last two days. This is much better than those days when some of our stocks have gone down by 10% or more.
> a 400 pt drop reduces the current sensex P/E by almost hundred bps. So this should be at 19, right?
> corporate profits have improved over time ... nothing drastic has happened in terms of reduced exports, still higher fuel prices (it's remained the same over the last three quarters), global downturn. Infact exports have jumped, global economy is also on a high, real estate, gold prices and commodities are increasing .. things are getting better. Now an improvement in corporate earnings by 10%, would result in a reduction of PE by 180 bps. So your PE will go down to 17.20. If corp earnings is up 15%, then PE is 16.35.
It's my opinion, that the market will be upto 12000 by the end of May. Watch !!!!
> the market has gone down by just 3.44% over the last two days. This is much better than those days when some of our stocks have gone down by 10% or more.
> a 400 pt drop reduces the current sensex P/E by almost hundred bps. So this should be at 19, right?
> corporate profits have improved over time ... nothing drastic has happened in terms of reduced exports, still higher fuel prices (it's remained the same over the last three quarters), global downturn. Infact exports have jumped, global economy is also on a high, real estate, gold prices and commodities are increasing .. things are getting better. Now an improvement in corporate earnings by 10%, would result in a reduction of PE by 180 bps. So your PE will go down to 17.20. If corp earnings is up 15%, then PE is 16.35.
It's my opinion, that the market will be upto 12000 by the end of May. Watch !!!!
posted by Shankar Nath at 4:43 PM
5 Comments:
I second that sir !!. In fact, i was expecting something like this to happen. 12,000 by May. Yes.
Regards,
Prasanth
Hello shankar,
Yaar i hav a querry for you,i bought 10 infosys shares @ 3230 on 10th april and till now i have not got the delivery.Will i be entitled for the bonus. Will you please tell about the dynamics of a bonus share.Suppose if i am entitled for a bonus then will my 10 shares become 20 and if so then will there be any impact on the market price of the infy shares,value of the shares remain to be same or will it come down.
Please guide,
Regards.
Hi Amit,
When companys declare a bonus, split, dividend etc., they always give a record date for the same. It is the shareholders that are in their records on that date, who are entitled to the declared changes. So just chk the record date for the bonus issue.
Warm Rgds, Shankar
Shankar,
Looks like we were wrong about 12000 by May !!
Regards,
Prasanth
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