Even though the current P/E is like close to 22. Looks like in the short term Indian markets are reaching fairmarket value. This is not a perfect math. I am sure the earning are slightly depressed especially for the companies that are dependent on exports. The other way to see is I cannot find any bargains in the markets that easily. But if some has a time horizon of more than 3-5 yrs, then there are still some fantastic companies with strong moats.
Reat this good article from Indian Investor Blog
I talk about this often - typically, you want your Earnings Per Share (EPS) growth to, somehow, match the Price-to-Earnings ratio you're paying for the stock. This, at an index level, makes even more sense - a single company may be irrationally high priced or have very high P/E, but the index as a whole should demonstrate EPS Growth levels close to the P/E you pay.
Here's where it's continuing to not make sense. Following my April and August posts, the Nifty P/E continues to scale new levels, while EPS stagnates. continue reading here
Sunday, January 3, 2010
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