The benchmark indices Sensex and Nifty have been evaluated below the average of 5 and 10 years due to the decline of 11 per cent and 12 per cent in the last few months in the last few months, the measurement of which has been measured as a PE ratio of the last 12 months Is performed.
The Sensex is currently trading at 22.2 times the PE of the last 12 months, while its average of 5 and 10 years is 25.4 times and 27.5 times. On the other hand, the Nifty-50 trading is being done on a PE of 21.7 times while its average is 23.9 times and 26.7 times the average order of 5 and 10 years. Analysts said the decline in these main indices broadly came due to dull results in the December 2024 quarter, after which the decline began.
UR Bhatt, co-founder and director of Alphaniti Fintech, believes that the market may fall further in the coming weeks as the companies’ income has not been fully contained and alert outlook could not be fully contained. Global factors are also showing their effects which need monitoring. Bhatt said that the difficult times of the markets are not over yet.
So far, the comments of companies that declare the results of the third quarter have been vigilant. Further quarters are also under morale control by estimates of sluggish increase in income. Also, there is a need to monitor the yields of government securities. So far, investors have not shown much enthusiasm. Investors will be in a better position that will stay away from the market at least one quarter. Also, they should wait till the budget and see how the way of income growth of companies is.
Midcap and Smallcap
The case of mid and smallcap segment is also no different. Nifty Midcap 100 and Nifty Smallcap 100 are trading at 37.1 times PE and 26.6 times PE in order to be below the average of 5 and 10 years. The decline in both these segments has been more intense than largecap. According to NSE data, the Nifty Midcap 100 index is at 53,146 levels and is about 13 per cent below its high level while the Nifty Smallcap 100 index is at 16,728, which has lost 15.5 per cent from its all -time level.
According to analysts of Nuwama Institutional Equities, if we look at history (2011-13 and 2018-19), investors must be prepared for long-term difficulties in both these market segments. He said that the current decline is like a market of Mandadis. The softening move of the US Federal Reserve and monetary softening midcap and smallcap segment in India will be important.