Often Investors Face the Dilemma if Indian Market Valuation is Cheap or expensive ?
Indian BSE 500 Market Cap as on July-5 is US $2.03 Trillion
Indian GDP Estimates for FY 2019-2020 - $2.97 Trillion
Indian Market Cap / GDP = 0.68
In 2008, Market Cap to GDP was Greater than 1.
NIFTY P/E Analysis
In Jan 2008 NIFTY was 6274 and EPS for FY 2008-09 - Rs 228 Thus the Most Expensive P/E = 27.5
In July 2019 NIFTY is 11,811 and FY 2019-20 NIFTY Expected EPS is Rs 580 = 20.36 Forward P/E Assuming 20% Growth
The Market doesn't appear to be overheated. However, EPS expectation of 20% Growth is a Bit Too much as it has not come in the last 20 quarters (5 Years)
So what happens if EPS Growth is just 10% ?
NIFTY EPS = Rs 530 and thus NIFTY P/E will be 22.3 still lower than Historical High of 27.5.
