STP duration should respond to market valuations. When markets are cheap, deploy fast — every month in debt costs you 8–10% in missed equity returns. When markets are expensive, deploy slow — patience costs almost nothing because overvalued equity barely beats debt. The cost of delay is not symmetric.
PE alone can mislead. Cyclically inflated earnings make the market look fair when it is overvalued. PB provides a balance — it is less sensitive to short-term earnings cycles.
The composite averages both deviations from their respective 10-year means, producing a single number that captures where the market stands relative to its own history.
Positive = overvalued. Negative = undervalued. Zero = fair value. The magnitude tells you how far from normal you are.
| Nifty 50 Metric | 10yr Median | Current (Apr 2026) |
|---|---|---|
| PE (Consolidated TTM) | ~23.4 | ~21.1 |
| PB Ratio | ~3.8 | ~3.5 |
| Composite Deviation | — | −7%Mild Value |
| Composite Dev. | Zone | Action | Duration | Monthly (₹12L) | Opp. Cost / Month |
|---|---|---|---|---|---|
| ≤ −15% | Deep Value | LumpsumDeploy All | Immediate | ₹12,00,000 | ₹875/L — too expensive to wait |
| −10% to −15% | Value | Short STP | 3 months | ₹4,00,000 | ₹700/L |
| −5% to −10% | Mild Value | STP | 6 months | ₹2,00,000 | ₹550/L |
| −5% to +5% | Fair Value | STP | 12 months | ₹1,00,000 | ₹375/L |
| +5% to +10% | Mild Premium | STP | 18 months | ₹66,667 | ₹210/L |
| +10% to +20% | Premium | Long STP | 24 months | ₹50,000 | ₹75/L |
| > +20% | Extreme | Don't DeployPark in Debt | — | ₹0 | −₹60/L — debt wins |
Frequency is always monthly. The amount adjusts, not the cadence. Duration = Corpus ÷ Monthly Amount. Review and recalibrate monthly.
At value levels (−10% to −15%), equity forward returns are 12–14% post-tax. Debt earns 4.2%. The gap is 8–10% per annum. Every month your capital sits in debt, you lose ₹700–875 per lakh. This is why value zones deploy in 3–6 months — delay is expensive.
At premium levels (+10% to +20%), equity forward returns are just 5–6% post-tax. Debt still earns 4.2%. The gap collapses to 1–2%. Each extra month costs only ₹75–150 per lakh. This is why premium zones can stretch to 24 months — patience is nearly free.
Beyond +20%, equity forward returns actually fall below debt. The gap goes negative. This is why you don't deploy — you would be paying for the privilege of taking on equity risk.
| Zone | Equity (Post-tax) | Debt (Post-tax) | Gap | Cost/₹1L/Month |
|---|---|---|---|---|
| Deep Value | ~14.9% | 4.2% | 10.7% | ₹892 |
| Value | ~12.3% | 4.2% | 8.1% | ₹675 |
| Mild Value | ~10.5% | 4.2% | 6.3% | ₹525 |
| Fair Value | ~8.8% | 4.2% | 4.6% | ₹383 |
| Mild Premium | ~7.0% | 4.2% | 2.8% | ₹233 |
| Premium | ~5.3% | 4.2% | 1.1% | ₹92 |
| Extreme | ~3.5% | 4.2% | −0.7% | −₹58 |
Based on historical Nifty 50 forward 3-year CAGR by starting PE. Equity post-tax assumes LTCG at 12.5%. Debt post-tax at 30% income slab. For illustrative purposes only.
This is not a set-and-forget system. Every month, recompute the composite deviation. If the zone has shifted, recalculate the monthly amount for the remaining corpus at the new zone's duration.
The formula is simple:
New Monthly = Remaining Corpus ÷ New Zone Duration
This creates an adaptive system: corrections automatically accelerate deployment, rallies automatically slow it down. No manual intervention needed beyond the monthly PE/PB check.
| Hard Rule | Trigger | Action |
|---|---|---|
| Lumpsum Trigger | Composite drops below −15% during STP | Deploy all remaining balance immediately |
| Pause Trigger | Composite crosses +20% during STP | Pause transfers, park remaining in debt |
| Re-entry | After pause: composite below +15% for 2 consecutive months | Resume STP at new zone's parameters |
| Minimum STP | SEBI requirement | 6 installments minimum |
| Maximum STP | Hard cap | 24 months — no Indian correction cycle justifies longer |
| Review Frequency | Monthly | Recompute composite, recalculate amount |
"The cost of holding cash is not constant — it is a function of what you are missing. When equity offers 15%, every month in debt burns wealth. When equity offers 5%, debt is your equal. When equity offers 3%, debt is your superior. This asymmetry is the entire framework: deploy fast when delay is expensive, deploy slow when patience is free, and do not deploy when the market charges you for the privilege of risk."