Tuesday, January 15, 2008

How expensive are Indian Markets

How Indian Markets compare with global markets? This will enable us to understand whether we are expensive as compared to our peers.
PE MULTIPLES OF SELECT MARKETS AS ON 31.10.2007:
DOW JONES 16.6
DAX 14.2
FTSE 13.8
SHANGHAI 55.2
NIKKEI 32.9
HANG SANG 20.9
KOSPI 16.6
STI 14.2
SET 20.9
BSE SENSEX 26.9
But the Markets generally discount one year future earnings. So going by one year forward PEs, according to an article published in Mint on 14.1.2008, India has the 3rd highest valuation of 25.62 followed by China at 4th position with a PE valuation of 23.46. The top two positions are held by Slovenia(31.79) and Morocco(30.11). Analysts are of the view that these PEs are justifiable on the basis of high growth potential for both India and China.
Based on this analysis any dip in the Indian Markets signals a buying opportunity. Going by the analysts' views the correction that has started will not be more than 5-10%.

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