Is this the right time to invest in equity market?

A famous saying in the financial market says, "Time in the market is more important than timing the market". I don't doubt this for a moment. An investor can get fabulous returns by staying invested in an a equity mutual fund scheme, unmindful of market ups and downs. At the same time no one can deny that timing is not important. Between buying at a high price and buying at a low price I will prefer buying at a low price. So how can I decide whether the current valuation of the Indian equity market is high or low? As a financial advisor I must have an answer. As a student of value investing answering this question is quest for holy grail.

I keep a keen eye in P/E, P/BV and Dividend Yield of Nifty ( The Nifty website gives easy and free access to all this information and I think is miles ahead of NYSE website. Try finding historic P/E for Dow Jones). Now as we all know a high P/E ratio means stock/index is expensive. The current P/E ratio of Nifty is 22.7 (High by historic standards. The highest P/E was 28.47 for NIFTY). 

I am a always a bit wary of using P/E ratio as the primary indicator of value. This is because earnings can be manipulated. However dividend cannot be manipulated. So Dividend yield of Nifty can be used to examine how expensive Nifty has become. The chart below plots the Dividend Yield of Nifty since January 1, 1999.