New Delhi: The evaluation of India’s stock market has come to a low of 30 months low due to frequent selling in the market. The benchmark Sensex is currently trading at a price-to-income multiplier (PE) of 21.9 times, the lowest after June 2022. Except for the period of June 2022, the current value of the Sensex is the lowest after June 2020.
Statistics suggest that the current assessment of the Sensex is much lower than its normal evaluation in the past. There have been only two occasions in the last 8 years when the index evaluation was reduced. The market witnessed a huge decline in the period of March-June 2020 during the Korona epidemic and after the Corona ended in June 2022.
In comparison, the index in January 2024 was trading 24.6 times PE and 24.75 times in September 2024. The index is currently trading below its 10 -year average assessment of 10 years below 24.1 times about 9.2 percent. The continuous decline in the evaluation of the index means that the share price is not keeping pace with an increase in the underlying income per share. Despite good income growth in recent years, a steady decline in index assessment ratio suggests that investors are concerned about future income estimates. Large investors, especially foreign portfolio investors, fear that the income per share may decrease further. This is why they are being sold in the market.
Foreign investor till 23 January this month. 58,804 crore has been sold. It is also possible that they sell in other markets like America in the hope of increasing earnings rapidly.
In the current financial year, the income of Nifty 50 increased to only 4 percent year-on-year, which is much lower than the estimated 18 percent increase at the beginning of the financial year.
In January, aggressive selling continued by foreign investors in shares
In the first month of 2025, aggressive sales of foreign institutional investors (FIIs) in Indian equity have continued. Foreign investors have been pure sellers in equity cash in most business days of the current month. Till January 24, FII has sold a total of Rs 69080.14 crore. While domestic institutional investors (DII) are making net purchases of Rs 66944.50 crore in cash.
Market circles believe that foreign investors are continuing selling due to strength in the dollar.
FII sells due to the strengthening of the dollar index and being above 4.50 per cent of the US bond yield. Foreign investors have significant investment in the financial sector in Indian equity.
