Indian Stock Markets Are Overheated
Business Today|January 24, 2021
Most economic data points and indicators show that Indian Stock Markets are overheated
Niti Kiran
Indian Stock Markets Are Overheated

Very often, headline numbers do not divulge too many details. To let the numbers do the talking, it is important to dive deeper. Also, it is difficult to accurately estimate any measure without studying its long-term trend and comparing it with other relevant indicators. Business Today looks at some such indicators such as price-to-earnings (P/E) ratio, market cap-to-GDP ratio and corporate fundraising to gauge market sentiment and portray the state of the economy.

Fundamental statistics such as P/E ratio are popularly studied in two forms, trailing and forward, to determine the valuation of a stock or an index. Trailing P/E is calculated by dividing the current market value by earnings per share over the previous 12 months. Forward P/E looks at a company’s likely earnings per share for the next 12 months. Asset allocation trends in terms of cash and stocks attempt at measuring the risk appetite of investors. Further, the growing disconnect between the market and the economy is captured in the market capitalisationto-GDP ratio. The miserable state of the economy due to lacklustre investment and consumption, and some visible green shoots due to the growing contribution of corporate earnings in quarterly GDP, have also been looked at. Last, but not the least, the pandemic year was defied by record high corporate fundraising, on softer interest rates.

Sensex P/E: Trading At A Premium

This index valuation metric is trading at a multiple of 32.9, significantly higher than its five-year trailing average of 23.5. Among its constituents, almost three-fourth are trading above their long-term average.

Denne historien er fra January 24, 2021-utgaven av Business Today.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

Denne historien er fra January 24, 2021-utgaven av Business Today.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

FLERE HISTORIER FRA BUSINESS TODAYSe alt
"Moving to cloud helped us grow❞
Business Today India

"Moving to cloud helped us grow❞

What was the problem you were grappling with?

time-read
1 min  |
November 24, 2024
She's Got Time
Business Today India

She's Got Time

MORE WOMEN ARE BECOMING WATCH CONNOISSEURS, SEEKING OUT BOTH JEWELLED AND TECHNICAL WATCHES FOR THEIR STYLE AND CRAFTSMANSHIP

time-read
3 mins  |
November 24, 2024
RISING STAR
Business Today India

RISING STAR

PARUL GULATI IS a name that's been steadily gaining prominence in the Indian entertainment industry after she appeared on season 2 of Shark Tank in 2023. She has become a multifaceted personality who effortlessly transitions between acting and entrepreneurship.

time-read
1 min  |
November 24, 2024
Building on a Legacy
Business Today India

Building on a Legacy

WHEN ZAHABIYA KHORAKIWALA stepped into her role as Managing Director of Wockhardt Hospitals over a decade ago, she confronted formidable challenges that have since turned into achievements.

time-read
1 min  |
November 24, 2024
LEADER IN INNOVATION
Business Today India

LEADER IN INNOVATION

AS FEDEX'S PRESIDENT (Middle East, Indian subcontinent and Africa), Kami Viswanathan has a lot on her plate.

time-read
1 min  |
November 24, 2024
WAITING IN THE WINGS
Business Today India

WAITING IN THE WINGS

Here are those who missed out as they have not yet completed a year in office; they'll be strong contenders in 2025

time-read
1 min  |
November 24, 2024
A DECENT PROPOSAL
Business Today India

A DECENT PROPOSAL

IN TODAY'S WORLD OF TRYING TO CREATE AN EQUITABLE SPACE, BOTH MEN AND WOMEN CONTRIBUTE TO THEIR HOUSEHOLDS. WOMEN ARE ENCOURAGED TO HAVE THEIR OWN SAVINGS POOL AND INVESTMENT ROUTINE. GIVEN THIS, HOW SHOULD FUTURE BRIDES APPROACH FINANCIAL PLANNING?

time-read
5 mins  |
November 24, 2024
Women and the STEM Bias
Business Today India

Women and the STEM Bias

EMPOWERING WOMEN IN STEM WILL NOT ONLY BENEFIT INDIVIDUALS, BUT ALSO STRENGTHEN THE ENTIRE INDUSTRY, DRIVING INNOVATION AND PROGRESS.

time-read
3 mins  |
November 24, 2024
ROCKET WOMEN
Business Today India

ROCKET WOMEN

WOMEN IN INDIA ARE NOT ONLY VENTURING INTO SPACE BUT ARE ALSO STARTING TO SPEARHEAD THE COUNTRY'S EFFORTS IN THE GLOBAL SPACE RACE.

time-read
6 mins  |
November 24, 2024
ONE STEP FORWARD
Business Today India

ONE STEP FORWARD

THE NUMBER OF WOMEN INDEPENDENT DIRECTORS IS GROWING STEADILY, BUT IT'S A LONG WAY FROM GENDER PARITY. MUCH MORE NEEDS TO BE DONE TO BREAK THE GLASS CEILING IN BOARDROOMS.

time-read
6 mins  |
November 24, 2024