On 12-May-2014, nifty closed at 7,014 and price to earning ratio according to NSE website was 19.47 which gives an EPS of 360.25.
As of yesterday i.e 6-Apr-2017, nifty closed at 10,331 and price to earning ratio is 25.65, so EPS is 402.77.
According to this data nifty has shown gain of 11.8% in the period of 4 year, which translates into yearly gain of 2.95%.
With GDP growing at more than 6% CAGR, Is Nifty growing at only 2.95%??
There has been cyclical distress in sectors like corporate banks, telecom and pharma. So profit of companies like SBI, ICICI, Axis, Airtel, Sun Pharma, Dr Reddy and Lupin are either depressed or negative. That is making Nifty optically more expensive than reality.
Hi Gaurav,
To formally answer your question, now here is the official data. It has
closed at 59% 
Watch this month of April now. It will show a very interesting picture of
what we think if it plays out.
The distress is real, not illusory. So I donât understand why you say Nifty is âoptically more expensive than realityâ.
And the distress is not cyclical either. Pharma and Telecom are non cyclical sectors, in Banking the distress is far more than what a normal cyclical downturn warrants. It is clear that the rise of Nifty has so far not been mirrored in earnings. And we donât know about the future.
For equity investors, there is no option but to be optimist about future of economy and companies.
Hi,
A novice investor here. Found an interesting video which makes the case that we cannot compare Nifty P/E from two different times (without accounting for interest rates)
Instead suggests Mcap to GDP as a better indicator for market overvaluation
Hi
I have been following this ratio but I have been unable to compute it myself from the data which I have found. But a couple of sources give the following data. The important point to note is that the trend on this is also high (my hypothesis). Not that the PE levels are in 99th %ile these days. But from an index perspective all roads lead to Rome. Personally I am treading with caution.
Source is world bank
Regards
Deepak
In a country like India where GDP consists of the growth from unlisted and unorganised space, unless we know the figures of how much do the unlisted and listed space contribute to GDP respectively, it would be difficult to use M.Cap to GDP as a gauge to judge the expensiveness of the market.
Do such figures exist ?
While it works good in US, guess even buffett would have not relied on this ratio so much had he been actively investing in India.
PE Ratio steadily increasing without looking back since the last 20 trading sessions.
Contrarian, anyone?
An excellent readâŚ
Commodity exports in FY18, has surpassed the FY14 highs in rupee terms after 4 years.
Saying nothing about the valuations but signs are there that are pointing to earnings recovery.
Q4, FY18 exports as well is at a all-time high. It is quite possible that the rupee is aiding the recovery, along with the commodity prices. This is just one small piece of the earnings puzzle since it concerns only commodities and only exports at that.
We believe that Indiaâs price-to-equity multiple is at about 12 times normalised earnings versus the headline multiple of 18 times. - Morgan Stanley, Ridham Desai
Curious to know how it was calculated to be 12 ?
No explanation given
Hi
Since it is the season of quotes by Mr Buffett and Mr Munger. Here is WBâs take on Beta.
Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, history based models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas
In Talebâs language IYI = geeks bearing formulas.
Rgds
Deepak
So in plain English avoid the noise.this is not the place to learn roman languageâŚstick to fundamentalsâŚshut the business news channels huh ?
Check the nifty p/e .Clearly bull territory.
