NIFTY - valued fairly - based on 10 year historical parameters

I have made a chart out of the historical P/E, P/B and Div Yield values for NIFTY based on the data
collected from www.nseindia.com. I have also added 100 day and 200 day moving average(DMA) for the
above 3 parameters.

P/E - for most of the time, you could see the 200 DMA is within the range of 15-20. Considering this,
with the current PE at 17, it seems to me that the market is fairly valued now. But note the P/E is
calculated on standalone basis of the company reports and hence it might not reflect the exact picture.

To support the above call, lets compare the P/B value during 2008-peaks and the 2010-peaks.
The peak values of nifty during 2008 and 2010 were almost same, but the P/B at 2010 is far less.
This implies that the nifty companies' books has grown big but still they valued lesser than 2008.

This lesser valuation of P/B during 2010 might be due to economic environment, but during 2010 there
were no big worries(even the hikes in interest rate were pretty recent, 2G scam was the only hot issue).
At least today we have a whole bunch of economic worries like - EU problem, interest rate, Indian
Governance issues.

Now notice the div yield, which is getting lesser and so this could also be a reason for why the company
books are increasing in size. But given the dividend becoming lesser part this won't be a major reason for the
P/B values that we see today.

So in my opinion, even if few of the worries soften(don't even need to go away completely), then nifty has
huge potential to go up further. So be watchful folks!!



Dear Readers,

Hope you would find this informational. 

With this I also have request, to post your comments specifically at the areas like what I failed to notice and what errors I have done. I would take this as my gift!  
I would also take your appreciations as my motivation to further my equity and equity-oriented products research.

Thanks!