Seems here is a misunderstanding. Key to resolve this puzzle is understanding the difference between relative valuation and overall market value (whether it is overvalued, fairly valued , or undervalued). Lets take a parable, "lemon". Relative Valuation
Assume you went to market (pola) to purchase lemon. If a lemon is selling at the market for 15. You know price of 10 lemons is 150. This is the relative valuation. In the share market context, if book value of Rs 1 is trading at a multiple of 2.5, then a share with book value of 15 should be traded at 15*2.5=37.5 (there are many other relative valuation methods like PE, sale-price etc. and each method has its own advantages and disadvantages). This is the price we expect an share to traded at that time.
My posts in following links were based on this.
http://forum.srilankaequity.com/t2500-ubc-price-and-bank-guarantees Valuing the Market
Take the lemon example again. If this lemon is not worth Rs 15 (overpriced), you won't buy. Instead you may go for substitutes like artificial lemon juice, tamarind etc. Similarly when the stock market is overpriced investors shift to other investment opportunities like property market, commodity and gold market etc. When investors move away from equity market, it starts declining. I have written in the following link how to determine whether market is overpriced or not. I'm happy if at least one investor read it and got off the market.
Note that relative value of a share decreases as the multiple declines when the market goes down.
There is nothing contradictory in my posts, if understood properly.
This is not an attempt to predict the market or attempt to value the market. Do your own calculations and see.