No matter what, our country is having a way to very fancy eqyuity amrket! We are having the Feeling already, like the Indian stock market is getting a little too fancy. You’re not imagining it. According to Nuvama Institutional Equities, India’s 12-month forward PE ratio is now at a sky-high 23.3—higher than any other major market out there. That’s not just expensive, it’s 1.6 standard deviations above the 10-year average. And if that wasn’t enough, the price-to-book ratio is sitting at 3.4—again, way above usual levels. In plain speak? Investors are shelling out top dollar for every rupee of earnings and book value. It’s like buying designer when the budget said streetwear. So, is it a smart splurge or an overhyped trend? That’s the million-rupee question.
At A Glance: India vs. Global Markets Valuations
| Market | Forward PE | Forward PB | Deviation vs 10Y Avg | FY2025 ROE |
|---|---|---|---|---|
| India | 23.3 | 3.4 | PE +1.6σ, PB +1.3σ | 15.6% |
| USA | 22.4 | 4.7 | PE +1.6σ, PB +1.9σ | 17.1% |
| EM (Avg) | 12.8 | 1.7 | — | 11.7% |
Strong Fundamentals Bolster Investor Interest
- India’s return on equity (ROE) for FY2025 is 15.6%, slightly decreasing to 14.5% in FY2026.
- U.S. ROE stands higher at 17.1% for FY2025 and 18.8% for FY2026.
- Emerging markets average ROE is 11.7% for FY2025 and 14.4% for FY2026.
- India’s relatively strong ROE sustains investor interest despite high valuations.
- Dividend yield in India remains modest at 1.2% for FY2025 and 1.4% for FY2026.
Valuation Concerns Apply Pressure: Risks Loom
Valuation concerns are keeping Indian markets on their toes. Since hitting highs in September 2024, indices have taken a dip, but those pricey valuations aren’t budging much. Sure, strong ROE and growth prospects keep investors interested, but with PE and PB ratios running so high, how much upside is left? The Nuvama report warns that these premium levels could make markets more sensitive to global shocks or sudden changes in local policies.
U.S. And Emerging Markets Comparison
| Market | Forward PE | Forward PB | Deviation from 10-Year Average (PE/PB) |
|---|---|---|---|
| India | 23.3 | 3.4 | PE: +1.6 SD, PB: +1.3 SD |
| United States | 22.4 | 4.7 | PE: +1.6 SD, PB: +1.9 SD |
| Taiwan | 16.1 | 2.7 | Not specified |
| Philippines | 10.6 | 1.6 | Not specified |
| Indonesia | 11.2 | 1.0 | Not specified |
| Emerging Markets Avg. | 12.8 | 1.7 | Not specified |
India’s equities rank among the world’s most expensive, balancing high valuations with strong returns. Investors should weigh elevated price levels against risks from global shifts and policy changes.
(With Inputs From ANI)
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Aishwarya is a journalism graduate with over three years of experience thriving in the buzzing corporate media world. She’s got a knack for decoding business news, tracking the twists and turns of the stock market, covering the masala of the entertainment world, and sometimes her stories come with just the right sprinkle of political commentary. She has worked with several organizations, interned at ZEE and gained professional skills at TV9 and News24, And now is learning and writing at NewsX, she’s no stranger to the newsroom hustle. Her storytelling style is fast-paced, creative, and perfectly tailored to connect with both the platform and its audience. Moto: Approaching every story from the reader’s point of view, backing up her insights with solid facts.
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