Business Standard

Cheap stocks aren't easy to find

It would be prudent to pick stocks trading at much lower valuations than the market average

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Devangshu Datta
Equity valuation is a game, not a science and what’s more, it has shifting goalposts. When sentiment is strong, valuations are optimistic. Absurdities are justified by tweaking timeframes and assumptions. When sentiment is weak, undervalued stocks with good prospects are shunned. Right now, sentiment is strong. The National Stock Exchange’s Nifty is running at a price-to-earnings (PE) ratio of 25-plus. The mid-cap indices are running at a PE of 30-plus. These are exceedingly high valuations in historical terms and justified by assertions that earnings will pick up in the second half of 2017-18 and in 2018-19.  

All valuation measures
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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