Valuation of several stocks enters the red zone

More than a third of Sensex and BSE 500 stocks are trading at levels last seen before the 2008 crash

A third of the Sensex stocks are currently trading more than one standard deviation (SD) above their 10-year average price-to-earnings (P/E) multiple, while six of them are trading at two SD above their 10-year average multiple. This means that 10 out of the 30 index stocks are valued 68 per cent more than their 10-year average P/E multiple.

Any stock or index trading above one SD is considered to be in the red zone, while two SD (this means 95 per cent more than the average) above the long-term average is considered a bubble zone. At the end of December