Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

What could Possibly Go wrong with Bank Nifty? – Part 2

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Bank Nifty Historical PE Ratio (Till Nov 2018)

Here is the historical PE-Ratio of Bank Nifty. This time there is a hockey stick growth in the banking index which is up by 10.42% during the month of March 2019 alone. In fact, touched the magical round number levels of 30,000 during intraday on 22nd March.

March 2019 Price Action was kind of maniac. It is like oneway drive towards heaven. And that one way drive ended on 22nd of March 2019.

NIFTY Bank Index comprises of the most liquid and 12 large Indian Banking stocks from the Banking sector. Surprisingly top 3 constituents namely HDFCBANK, ICICIBANK & KOTAK Bank alone contributes to 67% of the weightage.

Current PE Ratio stands at 60 which is exponential by any means and at historically at the extreme levels. A high P/E suggests that investors are expecting higher earnings growth in the future and on the other side it also means kind of overbought levels from the investing timeframe perspective.

Just 3 private sector banks have an approximate weightage of around 67% in bank nifty.

Bank Nifty Top Stocks – 1 Year Performance

So, What do you think? What could possibly go wrong this time? Is it different this time?

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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2 Replies to “What could Possibly Go wrong with Bank Nifty? –…”

  1. its simple……..hdfc will have meltdown…….earlier we had the 4 of axis icici indus yes all growing at 25% per quarter until yes and icici got chopped…..while GDP was loitering..that was the tell

    HDFC is a giant bernie madoff type……..20% every year in a place of xtreme competition and GDP slowing……..and its book value is highest…..a little thing will send it tumbling way down…it just doesnt add up….oh and its the only trade where everybody is positioned one way…..so max pain causation….

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