Series 74 – India Valuations and Our Thoughts

The last week, we had given a small snapshot on validating the right sectors in the right cycle using  RoE Expansion. This week we would want to talk about valuation of Indian Markets and our thought process.

Our investors frequently ask us if it’s appropriate to invest at current market levels and whether we should deploy our money now or wait for a correction. In our most recent episodes, we discussed the various investor types that would choose to deploy cautiously and wait for a correction, as well as those who would prefer to deploy aggressively into small cap space. How do we currently perceive the Indian market’s valuations?

While the first figures shows the broader market’s P/E which is below median and hence does not look expensive, the second figure depicts the P/B of the market (Nifty 50) last 10 years which is at 10-11% premium to our long term average. We could say that the market is neither cheap nor expensive. There are pockets of froth that has been created which is driving the markets to all time high, it is imperative that we avoid that kind of sectors and companies and focus on areas where there is still true potential of growth and invest in them with the right valuation. At ITUS this is what we strive to do and hence we would appear a contra-kind of portfolio.

We will come back with more interesting information on the portfolio and outlook on the market in the following weeks.

Also, we keep writing to you about our SIP program that presents investors with a convenient avenue to regularly infuse capital into the client’s portfolios. Feel free to check out the benefits for your clients. If you need more info, reach out to your dedicated relationship manager at [email protected].

These weekly episodes are now available in our website for your quick read and you may access the same in the below link.

Weekly Enlightenment Archives – ITUS Capital