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What happens to forward returns when Nifty breaches P/B of 2.8? Lessons from 10 breaches across 8 market-stress episodes since 1999
Investment Guru 59 min ago·23 Oct 2026, 5:55 am
Stocks Investment Guru
A new study has examined what typically happens to the market when the Nifty 50 index trades at a price-to-book (P/B) ratio of 2.8 or higher. The research analyzed ten such breaches over the last 25 years, spanning eight different periods of market stress. The findings suggest that while the index may have already climbed to this valuation level, the best returns for investors often occur in the months that follow.
For retail investors, this data implies that a high P/B ratio does not necessarily mean it is time to exit. In fact, the study indicates that the subsequent performance of the market can be surprisingly robust. However, the data also highlights that these periods are volatile, and the market can experience sharp corrections before the upward trend resumes.
Moving forward, investors should focus on the broader economic indicators and corporate earnings rather than just the valuation multiple. The study serves as a reminder that market cycles are complex, and historical patterns can offer clues, but they do not guarantee future outcomes. Keeping a long-term perspective is essential during these phases.
Excerpt from Investment Guru
Daily Stock Derivative Lens - 23rd October 2026 by Axis securities Monthly Rollover Report 23rd October 2026 by Axis Securities Ltd Please click the activation link we sent on your email An email has been sent to your registered email address containing an activation link. Please click on the link to activate your…Read the original at Investment Guru
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