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Markets are now entering Overbought area . I am putting up two charts which shows up historical relationship between Nifty levels and Nifty PE . Nifty PE is now in around 21 and hence its the time to be cautious .

Overbought Examples

Oversold Examples

Also there was good time to buy in Mar when Nifty PE was around levels of 12-13 . historically it has been shown that markets reverses after those levels in nifty PE

Conclusion :

Markets are now in overbought region and hence its time for cautious moves . Invest for short term to get good returns as it can go little more up . But better book profits once PE reaches around 25 levels .

This entry was posted on Thursday, June 4th, 2009 at 8:19 pm and is filed under Educational, Market updates, MoneyVidya Blogger Network, Technicals. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.