| Company | Value | Change | %Change |
|---|
| Index | 3-year avg | Feb 12 | Peak | Peak date |
| Nifty 50 | 19.15 | 19.14 | 21.3 | Sep 30, 2024 |
| Nifty midcap 50 | 26.1 | 28.3 | 35.4 | Sep 24, 2024 |
| Nifty small cap 100 | 18.2 | 21.2 | 24.6 | Nov 12, 2024 |
The valuation figures cited above is the ratio of price divided by the estimated one-year forward earnings. Price to earnings ratio is a metric that describes how much the market is willing to pay for every rupee of future profit and therefore, the ratio is expressed in multiples i.e. number of times.Markets with lower price-to-earnings ratio are considered to be more attractive or better bargains than those valued higher.
“We are at 19 times earnings on the Nifty, and we have corrected 12-13% from the top. If we assume 18 times earnings as the base, there could be another 5-6% downside left on the Nifty,” Vinit Sambre, Head of Equities at DSP Mutual Fund, which manages assets worth nearly $22.29 billion, told CNBC-TV18 on Wednesday.
At the height of the market euphoria in the second half of last year, India has been widely described as the most expensive equity market in the world. However, the downtrend since then has tempered the excitement and the valuations.As seen in the table above, while Nifty 50 and the Nifty Midcap 50 peaked in late September, it took another month and a half for the tide to turn for smallcap stocks. Smallcap investors have lost ₹4 lakh crore as index plunged 20% in the last two months.
“Most of the risks are now on the table, so whether it is Trump tariffs, whether it’s some slowdown in earnings. By the way, if you see a broader universe, it’s not as bad as what has been made out to be,” Gurmeet Chadha, Managing Partner and chief investment officer at Complete Circle, said.
The Mumbai-Based Chaddha — who managed ₹610 crore in funds, as per SEBI data at the end of December 2024 — sees opportunities in banks, chemicals, and defence stocks.
After five straight days of sell-off, indices staged a sharp intra-day recovery on February 12. Data as of 12:50 pm. Both midcap and smallcap stocks lost more than 8% of their value in the three trading sessions.
Read more: Amidst the market crash, Pankaj Tibrewal cites 5 reasons to turn bullish
First Published: Feb 12, 2025 1:14 pm IS
