InvestorQ : Is it true that the Indian markets have become expensive in historical terms?
Arya Nanda made post

Is it true that the Indian markets have become expensive in historical terms?

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Deepa Salunkhe answered.
10 months ago
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The bounce has made Indian markets definitely expensive. The rally in the market pushed the Nifty and Sensex valuations to a 10-year high. On a day when the Nifty scaled the 10,800 mark, the P/E ratio of the Nifty was at 20 times 1-year forward earnings. While Nifty is still 10% shy of its all time high, the valuations have become steeper.

This is a steep premium in such tough times. The Nifty P/E ratio is also well above its 10-year average of 16.5X. The markets had made an intermediate bottom on March 23 and have bounced nearly 45% since then. During this period, earnings and indices have largely diverged. Clearly, there is too much value given to market optimism.

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