Though analysts feel Indian economy is looking robust, it is also true that the market has rallied more than the corresponding earnings growth in recent years. Of particular worry are certain overheated segments which are nearly in bubble territory. These include ‘new-age businesses’ that have caught the fancy of IPO investors.
The Indian stock markets are trading at very high valuations. Not only are they about 90% costlier than other emerging markets, but very high compared to their own historical average. The trailing 12-month PE ratio of the Sensex is now 28.51, compared to its 10-year average of 22. Some may argue that instead of trailing PE, investors should look at forward PEs in such turbulent times. But even the Sensex Forward PE is at 34% premium to its
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