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Monday, December 23, 2024 | 08:07 AM ISTEN Hindi

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An unselective approach to investing

Buying a random selection, you will pick up some multi-baggers. But there will be considerable suffering for others

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Devangshu Datta
Some of the news during the last week was good. There are several potential vaccines in the pipeline, including at least one from India. The number of daily Covid-19 cases may be close to peaking. The economy is gradually reopening.

The stock market gained, with the Nifty up by 2.5 per cent week-on-week. That takes current price-to-earnings (PE) for the index up to the 28x levels. Optimism is all very well. But these valuations are irrational. To justify a 28 PE, you need earnings growth at around the same level (28 per cent) and that’s unlikely with corporate advisories uniformly negative,
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

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