Even historically, Indian markets have remained pricier compared to their regional and global equivalents and most of it has to do with the appraisals of sectors such as consumer goods and purchaser discretional that bomb to edge lower even in this global equities retreat.
At a time when India’s benchmark Sensex posted its worst weekly decline since August on Friday, some of the stocks continue to remain expensive among peers.
Based on one-year forward earnings, Sensex currently trades at 18.12 times whereas one-year forward price to earnings (PE) of MSCI Emerging Markets is 12.25 and that of MSCI World is 15.8.
Sectorally, one-year forward PEs of BSE FMCG, BSE Consumer Discretionary Goods and Services, BSE Capital Goods and BSE Healthcare stands at 30.9, 25.5, 24.9 and 22.8, respectively.
And if we look at individual stocks, Bharti Airtel, Biocon, United Breweries, DLF and Dish TV India are among the most expensive with one-year forward PE ranging between 50 and 76.06 times.
On the contrary, sectors such as BSE Oil and Gas, BSE Energy, and BSE Metal have one-year forward PEs of 10.8, 11.7 and 11.9 times, respectively, making them the cheapest indices. This not only inflates the current and temporary economy flux but also induces greater impunities to the other roller coasting world economies.
The valuations of stocks such as Reliance Power, Tata Motors, Hindustan Petroleum Corp, Oil & Natural Gas Corp and Vedanta are cheaper with one-year forward PEs at 8-9 times.
The BSE capital goods index also declined the most, losing 2.65 percent, followed by bankex 1.11 percent, metal 0.56 percent, realty 0.36 percent, IT 0.29 percent, infrastructure 0.13 percent and consumer durables 0.11 percent.
While telecom, auto, power, PSU, FMCG and healthcare ended higher.
Broader markets too followed benchmarks as the small-cap index fell 0.37 percent and mid-cap fell 0.09 percent.
So, 2018 has seen a moderate start at BSE Sensex and adding to its value of moderation, we can somehow hope it to get better in a coming few days.
