Fair value of sensex

In this post we review the fair value of sensex based on historical data.

(Re-posted, from 11/Nov/2011)

fair value of sensex

  1. 13 – 22 is the broad range (71% of the time, market stays within this range)
  2. 5% of the time market fell below 13 PE
  3. 17% of the time it remained below 15
  4. Average PE for the period is 20.9
  5. PE of 20, followed by 16 are most common
  6. EPS growth rate for the period is 14.6%
  7. BV growth rate is 13.5%

As of 11/11/11 – Sensex was trading at a TTM PE of 18.24. 42% of the time, sensex has traded below this value. Market is slightly undervalued.

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