The performance of Indian markets has been very poor in the last one year. It has lagged behind the world’s big market in terms of returns. Its performance in both dollars and local currency has been weak. Weak profit growth of companies, geopolitical tension and trump tariffs can be due to this. Motilal Oswal has said in his report ‘Bulls and Bears’ that Indian markets have not given any returns in dollars. However, in this calendar year, the return of local currency i.e. Rs. 3 %.
Nifty is approaching its long term average
The question is whether after this poor performance Indian markets The valuation has reduced and now will the interest of foreign investors increase in investing in India? According to the report, the Indian markets have not yet reached close to their lower levels. Yes, it is true that it is growing close to its long term average. If you talk about Nifty, then it is trading at 20.6 times the 12 -month forward PE ratio. It is close to its 20.7 times long term average.
Still at valuation premium
The price-to-book ratio of the Nifty is 3.1 times. This means that the historical average of 2.8 times is currently at 8 percent premium. Trailing P/E Bay is trading at 23.2 times the Nifty, while its trailing P/B ratio is 3.4. This is also more than historical average. India’s market capitalization and GDP’s Roshiyo is currently 122 percent. This is 10.5 percent more year -on -year basis. This is much higher than the long term average of 87 percent.
India is the most expensive second markets in the world
The above data indicates that despite poor performances, Indian markets are the second most expensive markets in the world. In the last 12 months, the MSCI India index has fallen by 11 percent. In comparison, the return of MSCI Emerging Markets Index has been 14 percent. But if we talk about the last decade, then the performance of MSCI India Index has been 62 percent better than MSCI EM Index. Indian markets declined by 3.6 per cent in August due to poor performance by Indian markets.
Indian markets have decreased in the last one year
In the last one year, the captivity of the global market has increased by 17.5 percent. However, during this period, the capacity of Indian markets has decreased by 9.3 percent. India and Brazil are exceptions only, otherwise the market captivity of all other big markets has increased in the last one year. If we look at the performance of different sectors, then about two-thirds of stocks are trading on premium compared to their historical average. About half of stocks have more valuations of the index. Smallcap stocks have fallen by about 11 per cent in the last 12 months, while midcap has declined by 6 per cent. Largecap stocks have fallen by just 3 per cent.