DDT - A curse for service export sector

IBM has been served notice by Tax authorities against valuation of imports. Recently, Accenture was scrambling to reduce its capital base. It was stuck as reducing capital base will increase the D/E or leverage for which permission of lenders will be required.

Why?
Lesser Capital Base or Equity will lead to lesser dividends and therefore lesser DDT

Broader Issues

1. Inter Company transfers
2. Payment of Royalty to Parent companies outside India
3. DDT
4. Valuation of Service in Import Invoices

This will lead to a situation where these global outsourcing companies will view India as unattractive and may shift their base to low cost locations.

Its high time that DDT should be done away with for hi-tech sectors such as IT and research. Any fall in revenue due to DDT can be countered by the relevant multiplier effect in economy and revenue collection thereof, in addition to accrued benefits related to entrepreneurship and innovation. Success of Indian companies in Pharma and IT are proof of this. 

Role of CMA, E&Y and Mckinsey in Kochargate

Management Consulting is booming in India. Though the companies boast of their success stories, very little has been written about the failures. Hindustan Motors was the starting point of Management Consulting and was an utter failure.

Quite recently in Kochargate, media is yet to explore role of Mckinsey and CMA in last 1 decade of mismanagement at ICICI. Its naive to say Mckinsey was not involved, at all

Should she meet the same fate as Rajat Gupta of Mckinsey

Also, E&Y (Ernst and Young) was all along the culprits during all those years.

This is second time for E&Y, first was Satyam

I salute to Arvind Gupta for all this valuable service to the nation, right from 1992.


Mckinsey was all involved during this period

https://economictimes.indiatimes.com/industry/banking/finance/banking/icici-bank-sets-up-top-team-to-track-loans-sound-npa-alert/articleshow/53460243.cms

Hope to see some revelations sooner or later

Happy Diwali 2018

First of all, thanks for all those, who have placed their confidence in me.

Brief about last year 
I was wrong in pointing some of the things such as

1. Some of the mid caps will become small caps. Most of them are still holding up.
2. Market will fall by at least 20-30%. Market increased to historic high (but it again dropped)
3. One particular stock, where I was horribly clueless was DMART but they did well. (I am still clueless on this stock as I feel there are long term headwinds against it) I advised exit at 1100 and stock has gone upto 1500

I was right in 

1. Predicting overall downward trend
2. Increase in interest rates
3. RBI holding firm against Govt. pressure
4. Rightly predicted that USD will rise and IT and Pharma will outperform
5. Bandhan - This is my all time favorite, not because I am highly influenced by pen of Tam Bandhopadhya, I believe Ghosh is one of those idealistic/honest person in banking industry, crowded by Chanda Kochars, Puri, Rana Kapoors. I am still confident about Bandhan story, if management can manage all the levers well. 

Overall - I have been negative on the Indian markets from last 1 year and I am still negative. My view is still same - Market is still very expensive and does not make sense to me

How long will I wait?

1. Till PE drops below 20-22 (currently it is 25), I will not even look into individual company valuations
2. What after PE <22 analysing="" and="" companies="" i="" in="" individual="" jump="" li="" of="" pe="" start="" the="" valuations="" whenever="" will="">
3. I am still waiting for the day, when the market will drop to the level of 16-18, Aha! Aha!....(remember that old tomato ketcup ad), it will surely come 

Predictions about next year

1. Global Macro - US may keep on growing till increase increase in interest rates start pinching the companies. Brewing Geopolitical risks (other than NK) may dampen the ongoing bull run from 2008.
2. Indian Elections - Can go anyway, but this will definitely lead to some shake up, esp if the mahagathbandan is formed and BJP is out of Rajasthan, MP, Chattisgarh
3. Banking sector - may see revival, private banks best bet. NBFC will see downward spiral. DHFL, Indiabulls and many others may get bankrupt or get acquired. Short term capital players, such as Bajaj will also face major headwinds and competition
4. Current Bear market - may go on till centre elections are over, there after retail investors and FIIs may return back to the market
5. Interest rates - Once the US fed hits the ceiling and the election dust settles, then interest rates in India may also come down

My Advice

1. Sit on the side - this is not a market to participate as there are lot of volatility triggers
2. Dont invest in bonds of NBFC's which are floating at very attractive yields
3. Don't look at falling knives, they are very tempting, but they have hurt, whosoever try to hold them. Beware, they are tempting
4. Wait for Centre elections
5. My favorite at the moment - TATA Motors because they seems to be getting the right mix and may be destined to snatch market from others
6. Even if you feel that urge to "missing the ride". 
1. Ride only the long term bets or Large Caps, if still clueless
2. Sectors - Private Banks, Select PSU Banks (the one which stands to gain from NBFC)
3. Pharma is my long term bet, so if something is below the intrinsic value, i will again place my bets on this
4. Still exploring - Pure Gold Loan companies, with more than 80% of business in gold related lending

Disruptions 

1. Regional Parties show good results
2. Iran

Distractions 

1. Trade War - Its already factored in and may subside from here
2. Congress led Govt - Wont matter much to the market, 

YCS List

I just did some elemental analysis of Whatsapp code and then crunched it bit by simple python code to find the most relevant data

Inter linkage between Finance and HR

Both the finance and HR are considered as services to the main business. The main business people are mostly from the Sales and Operations side. No wonder, almost all the great companies have people from Sales or Operations as CEO. My favourites are

1. Tim Cook - Operations
2. Jack Ma - Sales

There are numerous examples of the same. However, no one has become as successful CEO without the support of good support functions. Finance and HR are the prime among them.

Though both of them seems to be separate in terms of specialisation, they are quite similar at the top level. Consider the basic framework of HR - BSC (Balance Score Card).

Almost all the KPI in the lower levels are evaluated on the basis of their financial implications. 

Famous Quotes of someone who departed

Vinod kumar ji was very close and I have spent substantial amount of time with of late, recently. Today, he passed away due to brain Haemorrhage and multiple failures, theron

But some of his words, still resonate deep in my mind

1. Wife is like a helmet. Always wear this stuff on the top. Else you are going to suffer both financially and personally. 
2. When we are crystal clear about something, then its better to be quick on discussions.
3. Have a mentor. His mentor told him never to tinker with master roll and stores
4. Family is first. Ultimately, this is what you will realize when you reach to 60. 
5. Always have peace of mind. Let other people earn for you while you enjoy your work. Invest in Equities. Look around for right time and right people for advice. Money doesn't grow on trees but in businesses. 

Whenever he used to be happy, he used to say "Chai Chalegi" and then we used to enjoy good conversations. 

Hydro power - Risk Assesment

When I was competing for the NEFC (National Energy Finance Competition) at University of Texas, one of the key aspect, which I focused on was about - How to Quantify the risk?

An objective modeling of risk in terms of putting $value to the risk and the probability of that risk is normally, what expert financial planners do. However, the variation across industries is so much that it is literally impossible for an outsider to do such an objective modeling in an unbiased manner. The problem with outsiders is that they get biased with the DPR, Social Risk Assessment reports, which are prepared for say a consulting company as a specific assignment for that project. 

Conflicts of Interests

There are inherent conflicts of interests in the DPR's and the other reports as they are being paid by the developer and which developer will not want an aggressive assessment of his project

How to quantify the parameters

First of all, bucketing of risk has to be done. For hydro, risks are classified as under

1. Financial risk - sponsor or lender need to have access to patient capital
2. Construction risk - EPC contractor need to have the relevant experience
3. Equipment Risk - Similar to BTG in Thermal, Turbine and Generator selection plays a big role in reducing other risks during construction as well as during operations
4. Environmental & Social risk - Issues such as resettlement or impact on communities are key once we enter into the real mud with the shovel
5. Regulatory - Regulations related to Construction (labor cess etc) can have deep impact on cost matrix
6. Political risk - Local political stability and the liaison with the political setup becomes important if we are operating with unstable provincial governments
7. Technical Risk - Important for big projects

Hydro projects have be executed in-situ and all local stakeholders automatically become party to the development. 

Technical Risk

For smaller project such <5-10 a="" any="" aspect="" becomes="" bigger="" complexity="" div="" evaluation="" for="" if="" is="" it="" key="" mw="" nbsp="" need="" no="" normally="" of="" project.="" project="" risk.="" river="" run="" technical="" the="" there="" tunnel="">

What if the the tunnel has to be changed due to hard rock or if the there is some hidden geological crack found in between such as the famous Serei Nala in Rohtang tunnel changed its course during the construction of tunnel phase. 

Who bears Which Risk

Since, Hydro projects have to be executed in-situ, surprises keep on popping, every now and then. At times, it is very difficult to draw a line between who bears which risk. Consider the case

1. Equipment Suppliers says he want higher rating of the bridges, on the way, to send their equipment
2. Power Transmission Company says they are back on schedule to connect the evacuation Point

Senseless Market

With a PE of 24, the market is continuously overpriced, but what surprises me more is the innings duration. Normally markets are about an "Perceived Absurd" level for 1-2 years, but we have already crossed that 2 year of sweet period.

I am still wondering - When will the market crash? Markets can stay stupid for long

Personally, there is no entry place in the market above a PE of 20. So, wait and watch. I will wait for 7500, to make myself a contender, for long positions.

Till then, wait for ............................

DMART IPO - Why I believe that analysts are wrong ?

This reminds me of the INOX IPO, with lot of similarities, which was also managed by a lot including Edelweiss Financial Services

I am surprised how fast people forget things

Net proceeds from D-Mart IPO will be used towards

1080Cr

1. repayment or prepayment of a portion of loans
2. Redemption or earlier redemption of Non-Convertible Debentures (NCDs)

366 Cr for

3. Construction and purchase of fit outs for new stores

350 Cr

4. General corporate purposes.

Good part = There is no OFS, and everything goes to the entity

Bad Part = the existing common stock is overpriced

My sniffing nose

1.      This dude, Damani want to sell equity, but never sold even part of the equity before this. That too, when this guy was well entrenched in financial world. Am I missing something here??

2.      Presence only in Gujarat / Maharashtra – Though good for focus but show me the potential for growth of same model outside these states as these states are already saturated.

3.      Cluster approach – Good for initial part, but will be really hard to replicate, where will the growth come from

4.      Never closed any outlet due to lack of profitability – Are you crazy? Are you really running business successfully? I seriously want to see the store wise numbers.

5.      Location+Infra – Densely populated area + Ownership / long term lease. There lies the problem, how are they amortizing costs, accounting of the cost of acquisition of real estate. I have to read between the lines of those depreciation / amortization numbers

More than 90% of their stores are owned and less than 10% leased

Their sales per sq ft is 

Dmart =22

Reliance = 15k

Future = 7.5

The analyst are going crazy about this, but wait, they perhaps don't know the predominant formats of these companies

Dmart stores are very small, compared to even Reliance

Point is they are paying higher CAPEX also, which analysts are perhaps ignoring

Lets look the numbers

Consolidated financial performance (in INR crore)
	FY2012	FY2013	FY2014	FY2015	FY2016
Total revenue	2,222.4	3,355.1	4,702.3	6,457.7	8,606.1
Total expenses	2,134.0	3,214.2	4,457.4	6,134.3	8,113.9
Profit after tax	60.4	93.9	161.4	211.7	321.2
Profit margin (%)	2.7	2.8	3.4	3.3	3.7

Revenue = 2200 in 2012

8600 in 2016

That implies = 400% in 4 year, crazy,

That too on a model when they claim  - “Location+Infra – Densely populated area + Ownership / long term lease”

It seems there is something wrong here, only one of them can be correct, either the revenue or the model

Adding to this, profit of 321 cr on 8600, I have done retail before, expressdwarka.com and it was literally asset free retail,

I can tell on face of it, 321/8600, seems like a blatant lie with 4% net margin on “Ownership Model”

(based on my experience of running the asset like expressdwarka, achieving even 3% is challenging)

Even if we trust the numbers, the PE is not justified with ROE of 20% in last 3 years

Priced at pe of 52.6 will take 1800 cr

FY 2016 , EPS = 5.7

Future Retail

PE = 30

Mar ' 16	Mar ' 15	Mar ' 14	Jun ' 11	Jun ' 10
Per share ratios
Adjusted EPS (Rs)	0.27	-0.63	-1.20	3.53	6.01
Adjusted cash EPS (Rs)	13.05	11.74	16.26	10.27	13.86
Reported EPS (Rs)	0.27	1.79	0.12	3.53	8.71

With a share price of 254, the current EPS, has increased due to payouts (which management manages) in last year. I strongly believe even Future Retail is overvalued, 

Conclusion

I have nothing against the business model and it sounds like a good company. But I have deep apprehensions about the numbers. Somehow the operating model and numbers are not matching

Buy / Sell - May be buy till 500-800, hold till 1000-1200, and then sell

Update 

Last time, I was whining about the share price of INR 1000 for this company. This company crossed INR 1200 today. I have my fingers still crossed.

Update
This stock crossed 1500, what is this ? Are people crazy to give this valuation ? 

Sindhi Dryfruits, Lajpat Nagar and Black Money

I said - "I want bill for full amount of 5700", he said "Sahab 5% VAT extra lagega". I said " Nahi ji bill chaiye"

Everyone stared at me as if I am doing a crime, by asking for bill.

That was Sindhi Dry Fruits, Lajpat Nagar.

Not only this shop, there are many other shops, which display promptly, "5% Extra for VAT for Card Payment".

Where are the Tax inspectors ?? Deep investigations needed.

Guesstimate 

Average Invoice at Sindhi Dry Fruits = 5000 (based on experience)
Avg. no of orders per counter = 1 per 3 mins = 20 per hour
Total orders per hour for 3 counters = 60 orders per hour
Total sales per day = (6+4*.5 for lean) = 8*60*5000 = 24 lacs per day = 7.2 cr per month = 84 Cr per year

VAT Tax avoided = 5%*.8*84 (80% transaction w/o tax) = 3 Cr
IT Tax Avoided = 8 Cr (assuming margins of 30%)
Total Tax loss to the Nation = 11 Cr


That is just one shop in Lajpat Nagar. There are 1000 other which use similar tactics and that too openly. We can do another guesstimate with data like mega, big, small and footpath shops etc.

But ultimately, Lajpat Nagar itself leads to a loss of around 500-1000 Cr to the nation. This is very much in Delhi, right under the nose of the all investigating agencies.

Where is the gap in enforcement? Is it intentional or just a miss??

5 biggest regret people have before they die

There is a very thought provoking book, I plan to read

https://www.amazon.com/Top-Five-Regrets-Dying-Transformed/dp/140194065X/

The Top Five Regrets of the Dying: A Life Transformed by the Dearly Departing

It is really soul searching. I would perhaps like to list them myself

1.       I wish I pursued my dreams and aspirations, and not the life others expected of me

a.       Sometimes, I look back and think that I could have better pursued my dream of entrepreneurship, long back. There was no need to waste so many years, just trying to prove myself

2.       I wish I didn’t work so hard

a.       Being ambitious is perhaps a curse on life, if it overshadows me. I felt that when I was in US and was alone

b.      I made some career  decisions, where I had to ignore my family

3.       I wish I had the courage to express my feelings and speak my mind

a.       I could not resist the fear of confrontations mostly from my better half as I don’t want to destroy peace of my life

b.      I could have spoken more courageously against some of the decisions, to which I have submissively agreed, especially regarding parents and child

4.       I wish I had stayed in touch with my friends

a.       Yes, that is perhaps one of the biggest regrets

b.      I didn’t get chance to meet face to face to my closest friends for long Vishnu, navin, rajiv and many others, its horrible, if things go on like this

5.       I wish I had let myself be happier

a.       I often got confused between happiness and many other things in life

b.      Perhaps the burden of so many aims, aspirations and images, overshadowed it

Can I live without regret, Yes

1.      Vacate Space, empty mind and de-clutter life

a.       Actually with minor adjustments, things can perhaps tough in the beginning but the space will increase the degree of happiness for sure

b.      I don’t need so much money to live happily.

2.     I will avoid Procrastinate regarding

a.      Ideal and obedient child and life partner

b.     Ideal career

1.      

Risk to the demonetization scheme and solutions

Demonetization is an excellent and laudable step, but as said wisely, "Devil lies in the details". Somehow the bureaucrats responsible for executing the scheme, seems to have been clueless about some of the ground conditions, such as

1. Banks are free to open new account without any centralized verification of data
2. There are lot of fake Jan Dhan accounts, which were opened by banks, to meet their targets. 

These 2 factors have led to creation of multitude of fake accounts.

Example 1 - Bank Manager colludes with a business man and opens 200 accounts on the basis of fake documents with no verifiable details and fake address. Simply the business man will deposit money in those fake accounts

200*say 2 lacs each = 4 Cr deposited

Use withdrawal slips and withdraws 20k daily from each account. He will be able to convert his black into white in 10 working days

Example 2 - Bank Manager knew he has created 1000 fake Jan Dhan Accounts to meet his targets in the past. He looks around and colludes with his favorite customers to convert black into white


Consider this, there are 8 Cr JD accounts and most of them are with dubious details. Even with a highly optimistic estimate, at least 30% of them are either fake or non-verifiable. So, 2.4 Cr fake accounts. This is very dangerous for the scheme.

Solutions needed to be implemented with immediate effect

1. Banks should be barred from opening any new account without verifying address physically and without PAN card
2. JD accounts should be barred from any transaction beyond 10k per month. If someone wants more limit, let them have regular accounts or they would already have that, if they have more than 10k income. 
3. Set examples and create detterence by sending notices en-mass and do some arrests of bank managers also, so that the whole banking community, gets the message, loud and clear

Hack of using ATM in Indian Cash crisis

Use a variety of methods

1. Talk to gaurds of ATM, if they belong to a security company
2. cashnocash.com - useless most of the times

Biggest hack is use the night time, around 10 PM and then once you have drawn 2500 per card, again join the line. After 12 PM, you will one more chance. 

Was the scheme of demonetization leaked, 15 days beforeho

There have been lot of media news and clippings of news papers doing round that the whole plan was selectively leaked to a select few people and groups

Who is brijesh dubey ? where did he got information from?

Govt. need to answer these questions, so that the conspiracy theories going around can be stopped.  

Demonetization - Good/Bad and the future

First of all, this is not the first time, demonetization has been done. The major difference this time is that the currency value is very less. 1000 ruppee at time of Morarji Desai = 10 lacs now (perhaps)

Evaluation - Good Part

1. It was well kept secret. Indira failed in this test. She perhaps had a mole.
2. RBI was kept in sych
3. well shielded secret = NDTV was perhaps falsely created and Govt. never meant such extreme step, US election sheilded warth of international media
4. Weekday choosen - Weekend shopping not disturbed, enough time and resource at hand at bank
5. Illegal and fake currency game will be halted for a short while. 

Evaluation - Not so good part

1. Jewelry shops were not closed for say 3-5 days
2. Too much of time has been given - 3 months (Come on, don't think people are that stupid that they will not be able to convert black to white in 3 months)
3. Loop holes in terms of corrupt bank officials esp. private banks. Here small time managers, are doing lot of money minting by opening fake accounts or dubious accounts without PAN or invalid PAN. 

What can be done right now?

1. Announce to deposit notes within 15 days, say by 20th of November. Left out people can still deposit after 15 days, but with greater scrutiny.
2. People should not be allowed to deposit more than 1.5 times of last year income as per ITR. If someone still wants to do, a special process should be followed
3. Close jewelry shops for 5 days
4. Banks should be asked not to open any new accounts in next 15 days, without special requirements approved by say zonal managers etc. 

Overall Evaluation 

It is really a good scheme and pending for long time. Baba Ramdev negotiated for this masterstroke in 2011, with Congress. But the scheme was not designed well. Though there are enough knowledgeable people in the Govt. and it is easy to think in the hindsight than in foresight, Govt.and RBI need to become more agile and adaptable and keep on changing tracks, so that all the loopholes are plugged.

Future

Common people will embrace digital currency. Small entrepreneurs will find it comfortable to deal with digital currency. Bureaucrats and Politicians will forced to find new and legal ways to park money. Big businessman will have business as usual and will have minor tinkering in just their business models.

One major impact could be cleaning of black money in daily life. It will continue like that only in elections. CA's will get higher demand for innovating accounting books.

Yes, one more interesting impact, ISI has to burn their existing inventory of INR and print new lots. They will also look for more innovating ways in future. 

A relatively silent Diwali

Good news for India, mass education programs seems to be working.

This time, Diwali was relatively silent. It is still very toxic and makes sense to close the door with AC unit on, but atleast it has been marked improvement from last year. 

How long can the markets stay stupid?

"You can fool some of the people all the times, but you can not fool all of the people all the times".

Stock markets have one metric, which everyone agrees on, is the thermometer for them - PE ratio. Though I personally dont agree with this (i prefer EV/EBIDTA, sum of parts, as they capture interest of all the stakeholders in the ecosystem), but there are some hard proofs

(https://craytheon.com/charts/nifty_pe_ratio_pb_value_dividend_yield_chart.php)
This link states, we are at PE of 24.5

Some of these estimates point that any long term investor will loose 30% of their portfolio in long term, if they invest now in Stock market.

Simply the market is stupid. Everyone knows that we are in stupid territory of the market. But how long, we will be here ?? This is the biggest question and its answer lies in following factors

1. Alternative Investment Channels 
• Real Estate - will remain in doldrums due to peak valuations
• Lending - Black money has been curtailed, so returns limited here
2. Interest rates - Historic low
3. Growth Estimate of the underlying economy - Decent atleast for India due to Modi and the Monsoon is the topping on the cake
4. Global factors - This is the only factor, which is really complex to analyse

Any predictions will be futile, without having decent estimate of each and every factor. But with the assumptions that there will not be any adverse global scenario - Markets will remain stupid for some more time. 

We are again stuck on the question - How long??

Fundamentally, the DCF of dividends should have been the value of the underlying security. But this strategy might be good for US but not so for India due to the following reasons
1. High DDT (around 17% div dist tax)
2. Very less avenues for pass-through (such as REIT and Yieldcos in US)
3. Very high taxation in India - Due to high taxation, people- both shareholders and the promoters, want to hide - white income (though it is similar in US, but its perception, that US Govt. is good manager, while Indian Govt. is like a corrupt manager, so India charges too high for tax)

Now, consider the alternatives for investors
1. FD - lower interests day by day
2. Bond Market - Underdeveloped

OK, let's do the comparisons now
PE of FD of say 8% = 100/8 = 12
PE (avg long term, stock market) = 14
PE (Currently secured bonds of good rated companies) = 7-8%
PE (current market) = 25

Booms are brought by retail investors and the bursts are bought by the institutional investors. Sure, institutional investors are clever enough, they ride the boom and profit from it and then they say at one point of time that markets are about to loose steam and they will say, lets park our cash (FII will do so in US treasuries, once they increase interest rates)

One very good alternative, which is evolving is NCD of relatively secure companies.
PE of Corporate Bonds = 100/11 = 9 (say ..decently secure.... Muthoot N6 unsecured NCD ). The institutional investors are going to park their money in these NCD's and wait for the market to collapse on its own weight. NCD and term papers will take atleast 6 months to develop, till then market may remain stupid or may be even more stupid.

From here, the market, can go upto say PE=28, as there is no negative sentiment in the market till now, but if the balloon swells to PE=30, then it is going to burst for sure. For the moment wait for PE=21-22, and then invest again till market again go to PE=24-25. Keep on investing and exiting in this narrow range, till it goes beyond PE=25, and at that moment, switch off the trade account and shift everything to FD/NCDs. But beware of NCDs of the NBFC's especially the one in real estate or with any kind of link to real estate or long gestation equipment finance such as DHFL, Indiabulls, SREI as they might have lot of hidden transactions. Beware of Infra/Housing (not low cost housing) - lot of aggression and chances are people are making mistakes in biddings.

It will somewhere around March 2017, that market will loose steam as institutional investors, will stop buying shares at sky high valuations, which have already been deserted by the long term investors like me

Wait for March 2017 and merry profits till then!

How long can the markets stay stupid?

"You can fool some of the people all the times, but you can not fool all of the people all the times".

Stock markets have one metric, which everyone agrees on, is the thermometer for them - PE ratio. Though I personally dont agree with this (i prefer EV/EBIDTA, sum of parts, as they capture interest of all the stakeholders in the ecosystem), but there are some hard proofs

(https://craytheon.com/charts/nifty_pe_ratio_pb_value_dividend_yield_chart.php)

http://historic-pe-ratio.weebly.com/

This link states, we are at PE of 24.5

Some of these estimates point that any long term investor will loose 30% of their portfolio in long term, if they invest now in Stock market.

Simply the market is stupid. Everyone knows that we are in stupid territory of the market. But how long, we will be here ?? This is the biggest question and its answer lies in following factors

1. Alternative Investment Channels 
• Real Estate - will remain in doldrums due to peak valuations
• Lending - Black money has been curtailed, so returns limited here
2. Interest rates - Historic low
3. Growth Estimate of the underlying economy - Decent atleast for India due to Modi and the Monsoon is the topping on the cake
4. Global factors - This is the only factor, which is really complex to analyse

Any predictions will be futile, without having decent estimate of each and every factor. But with the assumptions that there will not be any adverse global scenario - Markets will remain stupid for some more time. 

We are again stuck on the question - How long??

Fundamentally, the DCF of dividends should have been the value of the underlying security. But this strategy might be good for US but not so for India due to the following reasons
1. High DDT (around 17% div dist tax)
2. Very less avenues for pass-through (such as REIT and Yieldcos in US)
3. Very high taxation in India - Due to high taxation, people- both shareholders and the promoters, want to hide - white income (though it is similar in US, but its perception, that US Govt. is good manager, while Indian Govt. is like a corrupt manager, so India charges too high for tax)

Now, consider the alternatives for investors
1. FD - lower interests day by day
2. Bond Market - Underdeveloped

OK, let's do the comparisons now
PE of FD of say 8% = 100/8 = 12
PE (avg long term, stock market) = 14
PE (Currently secured bonds of good rated companies) = 7-8%
PE (current market) = 25

Booms are brought by retail investors and the bursts are bought by the institutional investors. Sure, institutional investors are clever enough, they ride the boom and profit from it and then they say at one point of time that markets are about to loose steam and they will say, lets park our cash (FII will do so in US treasuries, once they increase interest rates)

One very good alternative, which is evolving is NCD of relatively secure companies.
PE of Corporate Bonds = 100/11 = 9 (say ..decently secure.... Muthoot N6 unsecured NCD ). The institutional investors are going to park their money in these NCD's and wait for the market to collapse on its own weight. NCD and term papers will take atleast 6 months to develop, till then market may remain stupid or may be even more stupid.

It will somewhere around March 2017, that market will loose steam as retail investors, will stop buying shares at sky high valuations, which have already been deserted by the institutional investors.

Wait for March 2017 or may be March 2018 and merry profits till then!