Nifty P/B ratio edges above long-term average; analysts call sign worrying

Analysts say high P/B and drop in RoE a worrying sign

The price-to-book (P/B) ratio for the markets — a metric often cited by the bulls to justify the rally — is in expensive territory. Currently, the trailing P/B for the Nifty50 index is about 3.4x, compared to the historical average of 3.2x. 

The book value or net worth of a company is the difference between its assets and liabilities. It is the total assets of a company, excluding intangible assets (such as patents and goodwill) and debt.

Analysts say the P/B shooting above the mean is a worrying sign. 

“The P/B reaching its long-term average is proof that investors are not punishing the