The small-cap index is trading at 31.52 per cent above the long-term average, indicating the need for extreme caution
The same medicine that was given to the market and economies in 2008 may not work for the current ailment.
The Nifty PE is currently at a higher level than what it was during the dotcom boom or just before the 2007-08 financial crisis
Reports have compared price to earnings (PE) ratio of various countries to arrive at the conclusion that India is one of costliest markets in the world.
Stock selection has become all the more critical as the euphoria in the space has pushed up valuations of many of them above their historic averages.
The sharp run up in mid-cap stocks has made them relatively costlier as compared to the broad index. Based on valuations the BSE MidCap Index is trading at a historic price-to-earnings (PE) of 37.69 times, which is higher than that of Sensex that trades at 21.76 times.
The brokerage firm says that even on assuming only 12 percent Nifty earnings growth in FY18 due to spillâ€over of demonetisation, valuations are factoring much damage at price to earnings (PE) of 17 times.
Nandan Chakraborty of Axis Capital expects earnings growth of 14 percent in FY17 and 21 percent going forward in FY18 largely on the back of a strong economy.
After a year of consolidation, Indian equities are likely to continue to stay in a trading range, albeit with high volatility, believes CNBC-TV18 Consulting Editor Udayan Mukherjee.
After a long run as the emerging market equity sweetheart, investors may be falling out of love with India stocks.
Investors not just plowed in most of their investments not just at peak valuations, they sold the most around the bottom and also about every step of the way to the rebound.
Aashish Tater, Head of Research, Fortunewizard.com, feels IL&FS Transport will stabilise at around Rs 170-175 in the next 12-18 months. He has a target of Rs 185 on REC from short-term perspective.
The price-to-earnings (P/E) ratio of the MSCI Emerging Markets Index is currently below 10 - levels not seen since November 2012 - and Citi recommends investors regain exposure to these stocks now instead of waiting for a catalyst to drive a turnaround.
CRISIL Equities has come out with a research report on comparison between IPO grading and price to earnings (P/E).