A comparison of the price-to-earnings (P/E) or price-to-book (P/B) multiples of all the Nifty stocks throws up the list of stocks that are being favoured and neglected. Stocks like Bajaj Finance, RIL and Titan are trading at a substantial premium to their average five-year P/E or P/B, while Sun Pharma, Zee Entertainment and Indiabulls Housing are quoting at a huge discount. “Investors are taking continued refuge in the quality and earnings predictability theme in an environment of economic slowdown; and there is a lack of pick-up in broader market’s earnings growth,” says the brokerage.
Should investors consider buying stocks that are available at a discount? “Predicting the timing of fortune is always fraught with risks, more so in the current underlying economic scenario,” the brokerage says.
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