Higher bond yields in the US led to lower Nifty P/E, shows data

A sharp sell-off in the equity market after a spike in bond yields in the United States should not come as surprise to equity investors. Historically, there is an inverse correlation between yields (or interest rate) on government bonds or Treasury yields and the price-to-earnings (P/E) multiple of the benchmark indices, such as Nifty50 or Sensex.

Bond yields in the US are up nearly 100 basis points from their lows in June last year, while the Nifty P/E remains close to a 25-year high of around 40x. The Nifty50 closed on Friday with a P/E multiple of 39.7x, down from 41.2x.