1. First factor here is the P/E ratio : P/E ratio is a important factor to check whether the market is overvalued or not.

P/E = Share price / Earning per share

If the PE ratio is higher , then its a signal of Overvalued markets . You can also check the past 15 year performance of market to analyze the all time high or the low .

2. Secondly you’ve to check dividend yield however it also indicate that something is profitable or not but we can also use this factor to identify whether market is overvalued or not .

Dividend Yield = Dividend Per Share/Current Market Price

High dividend yield is a thing,who is telling about that market is Undervalued and its a good time to consider a stock and if low dividend yield is there then market is overvalued.

3. Third and the most important factor is market capital to GDP , GDP is a very most important thing for a country because it defines the whole performance of the country and also it tell you about how developed the country is . If you compare these two things at a time then it will tell you all things in a nut shell.

Market Capital to GDP = Market Capital(All listed Companies)/GDP

It is also called as Warren Buffet’s indicator

When the total Market Capital is greater than GDP then the market is overvalued and if the Market Capital is lower than GDP then the market is undervalued .

4. Fourth and the last indicator is Beer Ratio , it is an indicator which will tell you about the amount of risk present in market because it compares govt. Bond yield with earning yield of stock market .

Beer ratio = Govt. Bond Yield / Earnings Yield of stock market

Earning yield = Earning Per Share / Market Price of share × 100

Earning yield shows that if you invest a particular amount in a company then what amount you will be getting in return

If government bond yield is lesser than earning yield of stock market then the stock market then the market is Undervalued and if this not the case then the market is overvalued

I recommend you to not take any investment decisions on basis of these indicator , Because I am just sharing my knowledge to enhance yours knowledge.