Here is a brief round-up on Indian Market valuation on various factors as told by ABN Amro.
- China and India are the most expensive markets in the world on the basis of current PE – 25.9 and 23.6 respectively
- India ranks on the top for lowest dividend yield – 0.9%
- On the EY-BY, [-4.1%] India looks badly overvalued. The Earnings Yield (EY) less the Bond Yield (BY) compares the price of equities to interest rates. The EY is the inverse of the PE ratio and basically provides a dividend yield but using the earnings per share rather than dividends per share.
- India is the second most expensive in PEGY at 2.5 [A PEGY ratio compares the PE ratio to the dividend yield and earnings growth. It is calculated by dividing the PE by the sum of the dividend yield and earnings growth rate.]
Think twice before you commit your hard earned money at current levels. However, you can work with your professional fund managers and decide.