How historical Book Value of Index provides cue to Market Direction? | Blog Brings Profit For You
  • Recover Lost Money Plan

    A number of traders have lost their money in the market due to wrong trading advice or wrong decisions and emotions. We keep on getting a number of requests for helping these traders recover their lost money. Thus, this was the genesis of Recover Lost Money Plan. We are proud to say that till date we have helped 1290 people recover their lost money. Recover Lost Money in Market

  • Our Most Successful Intraday Tip

    Jackpot tip, as the name suggests has the potential to make you a Millionaire as it is not the number of tips one trades; but it is the accuracy of a single tip which has the potential to make you a Millionaire. This tip is a value for money for all i.e whether one can see the trading terminal or not or is dealing through a broker on phone at BSE, NSE or in Future and Options segment.
    Click on Jackpot Sure Shot Tip to know more...

Subscribe to this blog

Subscribe to full feed RSS
What is Daily Market State???
Enter your Email

Preview | Powered by FeedBlitz

How historical Book Value of Index provides cue to Market Direction?

Posted By On 12/17/2008 09:01:00 PM Under
1. It is a smart strategy to follow the book value of an index and I will take an exape of Indian Index Sensex to explain my view point.

2. Presently Sensex P/BV (Price to Book Value) is hovering near 2.3 and the same is near historic lows of 2-2.4. it has been observed historically with data of past 18 years that whenever the P/BV ratio has drifted near 2, Sensex has given a smart pull back.

3. To further elucidate this point we will take example of Sensex value of 2800 in November 1998 and than P/BV was 2 and with in next 6 months a strong pullback rally of more than 40% was seen which pushed the index to 4000 levels.

4. One can see P/BV value for contemplating the falls also as during last 15 years whenever P/BV ratio has crossed 6.5 which happened recently in January 2008 led to the fall of the market.

Most Read Content