Sensex Pe Says Nothing

On the other hand, multinational stocks like Hindustan Lever, Nestle, Colgate and Glaxo enjoy much higher price to earning ratios. While Hindustan Lever and Nestle have PE multiples of 43, Glaxo is available at 30.

Several Indian corporates also have high Pes. These include M&M, Indian Hotels Telco, East India Hotels and Bajaj Auto. This is because these sectors, autos and hotels, are doing very well. PEs for finance companies, reeling from the effects of the liquidity crunch, and the computer hardware companies, which are doing very badly, are very low, at around 2 to 5.

There is, therefore, not one market, but several smaller markets which have different valuations. In every segment, there are a few stocks which are the focus of buying interest, leading to high PEs for these stocks. Even if the market does revive, it will do so selectively, looking only for quality.

 

Those with money stuck in useless new issues or bought-outs do not have much hope of recovering their funds.