InvestorQ : Why are people investing in the stock market when the current NIFTY PE is around 32?
Katherine Gonsalves made post

Why are people investing in the stock market when the current NIFTY PE is around 32?

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1 month ago
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Trying to predict what happens in the future based on historical data is a recipe for disaster. If Nifty plunges after hitting a PE of 28, don’t you think someone would have noticed the trend and gamed the system by now?  Stock markets are not that easy a market to forecast and if it were, most research teams, equity, and data analysts would be obsolete. 

Even if we were to assume that the market crashes when Nifty PE is around 28, the indices Sensex and Nifty are considered indicators of stock markets in the general sense. This means that there are many shares whose performance is not captured by the benchmark.  

This also goes to show that there many individual stocks that have their own trajectory, insulated from the performance of the index, in this case, the Nifty. Just because Nifty is “poised to crash” after its PE crosses 28, doesn’t mean that individual stocks have to do so. If you find an individual stock or a group of stocks whose intrinsic value is way higher than their current prices, why wouldn’t you want to invest in such stocks? 

Forecasts rarely, if ever, work in the stock markets. the present-day dynamics of the stock market are not the same as seen a few years back. Retail participation has increased in the past year. This means demand has increased while the number of shares in the market has not increased proportionally. This will tend to put upward pressure on price. This does not mean that the fundamentals have overtly changed. Who knows, may Nifty PE of 32 is the new 28.

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K V RAO answered.
1 month ago
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Select stocks have potential for rise in the short term and long term. PE is only one indicator. There are other yardsticks to measure the scope. Once the pandemic backtracks, market will rebound. Some scrips are available cheap.

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