Strategy in pic
A picture speaks a thousand words! Nifty Price-to-Earning (PE) Ratio vs Nifty Price Level is depicted pictorially in the chart below from the year 1999 to 2016.Please note that this strategy is only for Nifty and will help get a sense of the trend in overall Indian stock market.
Zoom into the image by clicking here.
Nifty PE from 17 to 11 could be considered as oversold zone (Bearish/Fearful zone). Buy fundamentally strong stocks when others are fearful.
Nifty PE from 22 to 29 could be considered as overbought zone (Bullish/Greed zone). Sell fundamentally weak stocks when others are greedy.
Nifty PE Ratio as on 26th Feb 2016 is 19.01
Nifty PE can be obtained by Clicking here. This strategy is not recommended to be directly used for individual stocks.