 "Representative Image. Illustration: Binay Sinha")
The spread between government bond yield and Nifty earnings yield has narrowed to 325 basis points (bps) from nearly 400 bps in September. Analysts say the spread, however, remains in “overvalued” territory—anything above 300 bps.
The 10-year government bond yield, considered to be a risk-free instrument, have softened from 8.18 per cent a month ago to 7.81 amid a decline in crude oil prices. Meanwhile, Nifty earnings yield —which is earnings per share divided by share price—has improved to 4.6 per cent from 4.1 per cent in September following the correction.
The spread between bond yield and earnings yield decides the attractiveness
