INSUBCONTINENT EXCLUSIVE:
This period remained highly volatile for the domestic equity market amid trade war tensions, sustained outflow of foreign portfolio money,
rising crude oil prices and a depreciating local currency
After scaling the 11,000 mark for the first time on January 23, the index hit a low of 9,951 on March 23
However, buying in 22 index stocks took it above 11,500 on August 20.
Shares of Bajaj Finance and Bajaj Finserv have rallied 67 per cent and
42 per cent, respectively, since January 23
In terms of valuation, the index is looking expensive compared with its long-term moving average
The 50-share index traded at a P/E of over 28 times on Monday compared with its 10-year average of 20.90
growth and low quality cyclicals
Bank, Eicher Motors, Titan, Cipla, Axis Bank, HCL Technologies and HDFC have gained up to 10 per cent since January 23
On the other hand, Tata Motors, Vedanta, HPCL, Bharti Airtel and UPL slipped up to 38 per cent between January 23 and August 17.
The BSE
Sensex also hit a fresh record high of 38,266 in early trade on Monday
Gains in capital goods, metals, realty and banking stocks amid firm Asian cues aided the market
From a valuation perspective, analysts are not too comfortable with the current level of the market.
Even though the Sensex typically
trades at a premium to its peers, it is currently trading at a higher-than-normal premium relative to its emerging market (EM) peers
For instance, from a five-year average perspective, India typically traded at a premium of 18 per cent to the median P/E of nine emerging
However, today India trades at a whopping 37 per cent premium to median P/E of EMS, Ambit Capital said in its recent report.
The 30-share
index currently trades at a 21 per cent premium to its 10-year average P/E ratio, Ambit said.
The recent rally in the stock market has more
support from domestic flows than FIIs
On a year-to-date basis, foreign portfolio investors have taken out some Rs 1300 crore, while domestic institutional investors have poured
And we have economies like Poland, which are doing well
Yet, these stock markets relative to the US are at multi-decade lows
Liquidity in markets like the Philippines and Indonesia has completely dried up
Ruchir Sharma told ET in an interview.
