eye of the beholder
Sensex trades at 24.49 times 1-year forward price to earnings (P-E), compared to a five-year average of 18.82 times. Nifty, meanwhile trades at 26.36 times 1-year forward P-E , significantly higher from its 5-year average of 18.37 times.
Sensex trades at 24.49 times 1-year forward price to earnings (P-E), compared to a five-year average of 18.82 times. Nifty, meanwhile trades at 26.36 times 1-year forward P-E , significantly higher from its 5-year average of 18.37 times.
BSE telecom index is trading at an exorbitant valuation of 303.93 times 1-year forward P-E, compared with a 5-year average of 61.39 times. BSE Bankex trades at 19.81 times 1-year forward P-E, up from a 5-year average of 13.30 times.
“The financial sector, specifically NBFCs, and most of the consumer space is expensive. The mid-cap index is significantly expensive—probably at unprecedented levels,” said Dhananjay Sinha, head of research at Emkay Global Financial Services Ltd.
BSE mid-cap index also scaled a record high on Thursday. It has been trading between 21 times 1-year forward P-E and nearly 23 times 1-year forward P-E, the highest since at least June 2013.
“One should tread cautiously,” warned Sinha, adding that earnings are lagging behind, and markets have rallied, and visibility of earnings growth is still missing.
Comments