Sensex valuation falls to nearly 5-year low with exception of Mar-Jun 2020

The index EPS tracks the combined earnings of the 30 companies that are part of the Sensex

The valuation of the Sensex has declined to its lowest level in nearly five years with the exception of March-June 2020. The benchmark index is trading at a trailing P/E (price/earnings) of 22.74X, down from nearly 31.3X at end of May 2021 and a five-year average P/E multiple of 26X.

Analysts say the “low valuation” explains the resilience in the broader market despite a challenging domestic and global macroeconomic environment.

“Stock valuations are reasonable and lower than what we have seen in the past four years. This has attracted value buyers, especially domestic investors, and explains the current stability in