Lets start by asking ourself this. Has most shares have had major corrections even 50-70%? Are a significant number of shares in the market trading around or below PE of 10. What will the overall market PE be after March 31 results?
If you think , their results are going to worsen in the future ( short- medium term) and they deserve lesser PE, does the current prices reflect those discounts?
Okay on a positive note may I ask you how much more should the below suffer ? I am not saying it won't as panic sellers and non believers can sell lower and bring them down
These shares are just a random example.
a) GREG have come down from RS 150 to Rs 16. Do you want it to GREG to drop to Rs 5! Is that a fair value?
b) REEF has come down from Rs 90 to Rs 30.
c) Hunt from Rs 2000 to Rs 350.
d) PCH from Rs 30 to 8
e) EAST from Rs 50 to Rs 13
f) TWOD from RS 40 to Rs 15
g) BUKI from Rs 1600 Rs 849
i) HVA from Rs 70 to Rs 15
j) PAP from Rs 8 to Rs 2.5
Some fundamentals ( random) including blue chips in present market
a) DFCC dropped from Rs 250 to RS 112 ( PE should be arund 10-11 now. Trading little above NAV)
b) JINS from Rs 20 to RS 11 ( below IPO, NAV 8.4 , PE 7)
c) DIMO from Rs 1800 to Rs 950 ( PE around 3-4, NAv just above current price )
d) KCAB Rs 120 to RS 65 ( tradign below NAv, PE around 7-
e) BFL from Rs 500 to rs 130 ( current PE around 7-
f) GLAS from RS 12 to RS 5.8 ( current PE around 6-7)
g) RICH from RS 16 to Rs 7.5 ( PE around 7 )
h) CDB from RS 105 to Rs 40 ( Pe around 5-6 even counting no profits for march)
i) SPEN Rs 220 to RS 114
j) LWL from Rs 180 to Rs 70
Okay let take some IPOs
a) SHL from RS 29 to 11
b) FLCH from Rs 5 to 2
c) BIL Rs 5 to Rs 3.4
d) TJL From RS 14 to 7
e) PLC from RS 18 to 11
What about introductions
a) PCP Rs 80 high to RS 17
b) OGL from high Rs 45 to Rs 18
c) AGST RS 20 to Rs 11
d) CDB Rs 110 to Rs 40
Right issues ( leave it as an exercice to find issue price and the trading price
Splits of illiquids
If I keep going there will be so much more. How much more correction do you need even counting few bad quarter for some of them? Note valuations are not always PE based only. There are other valuations method and factors.
Yes there are still a few overvalued and illiquid shares which are yet to be corrected Ex : CARS, CARG, KZOO, PARA which might have their own reasons.
But if you expect market to drop further a lot,
a) how much more should these shares deserve to drop even counting drop in profits for some of these companies . We need to look at historical values, historical backing and other factors also in analysis. Just simply saying SPEN should be at Rs 60 does not work as for that to happen Harry J need to not care, and the Foriegn funds also
b) if you think more negativity will come to CSE, how much should ASI get discounted from now ( ASI 5400), 10%, 20% ,30% or 40% overall
c) After March 31 how much will be the new valuation for overall CSE
I do not know about you guys as some want bull and some want bear. But I will tell you what I want. I would like the market to stabilize further for some more time.
1) Get the panic and worried sellers out of the way during this process so to make a clearer path before a bull( so there will be lesser obstacles). I still see some people willing to sell at a drop of a pin. But compared to before it is much less that is a good sign.
2) Some people are still insecure and have less confidence in market. If there is a few days down trend some people still sell like there is no end. ( again much better than before). Even in the forum I see many think only short term only as "holding" is a problem for them.
3) This fragile mentality , trust and confidence need to build positively for a proper bull run so people do not sell when the market goes up just a little. They need to trust their shares are worth more accept for small profit. Else this bull bear fight cycle will remain. Longer it remains the market will get to avoid further drastic crashes making way for a future bull ( do not when yet).
Sudden ups and sudden down now are not healthy for market.
The points I mentioned are not to suggest bear or bull right now but to rationally look at where the share valuations and market stand now. All I can say is until bear is in action with bad news coming to make it worsen , bear supporter predictions ( some of them) will come true and when the true bull starts bears are going to get beaten as I can easily see 50-100% uptrends for certain shares.
It is too soon or too late to enter now? I do not know as it depends on your strategy. Hope some things I mentioned will help in someway.