Low price-to-earnings stocks: The secret sauce in Nifty's earnings recipe

'A MIRAGE': Beyond the index's surface, the Indian market reveals full-to-frothy valuations

Given the strong market momentum, the benchmark National Stock Exchange Nifty has reached record highs more than a dozen times in the past month.

Even though the price-to-earnings (P/E) multiple of the 50-share blue-chip index, at 22 times its estimated earnings for 2024-25, is still considered ‘reasonable’ compared to historical levels, it makes more sense to analyse the valuations of individual companies, given the wide dispersion in P/E ratios.

Interestingly, stocks with multiples below the index valuation are contributing the most to the profit pool.

“The Nifty 50 index is a bit of a mirage,” say Sanjeev