The BSE SENSEX was then just
400 points away from the 30000 mark. Many shares including United Breweries, Wabco, Just Dial and Jubilant FoodWorks were close to fetching 100 times multiple
for their earnings.
Two years later, the SENSEX is again perched near 30000. The index is currently trading at 17.3 times estimated FY17 earnings.
Two years later, the SENSEX is again perched near 30000. The index is currently trading at 17.3 times estimated FY17 earnings.
Considering the other MSCI
indices, India's benchmark index is today one of the most expensive globally.
The trailing twelve month
P/E multiple of the SENSEX is way higher than the long term average of 18
times.
Having said that unlike in 2008, the earnings of Indian companies are far from their peak. And a steady revival in earnings could well keep the index at lofty valuations. Individual companies, especially mid and small caps, though, may not have that luxury.
Having said that unlike in 2008, the earnings of Indian companies are far from their peak. And a steady revival in earnings could well keep the index at lofty valuations. Individual companies, especially mid and small caps, though, may not have that luxury.
And unless their earnings
growth catch up to the steep market expectations in the coming quarters, a
sharp correction is inevitable.
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