Wednesday, 17 February 2016

A Look at Indian PEs


The first question is...why look at the P/E? This video explains it.



On to the blog entry.....

In case of an Index, simplistically speaking, the P/E represents the ratio of the combined market price of the companies that form the index, and their combined earnings i.e., "index earnings".

Mathematically, it is \[\frac{combined\ stock\ price\ of\ Index\ companies}{combined\ EPS\ of\ Index\ companies}\]

where EPS = Earnings Per Share.

A stock P/E or Index P/E ratio changes in the following manner:

1) Directly proportional to stock price or combined stock price of Index companies.

2) Inversely proportional to company EPS or combined EPS of Index companies.


A very high PE could mark the end of a rise in the Index, i.e. mark the beginning of a falling trend in the Index.

Index P/Es, updated 17th Feb, 2016.

All data and charts © Craytheon. Published with permission. You may not republish the following data without Craytheon's written permission.


1) Nifty PE Ratio on 17-Feb-2016 is 18.67. ( Long term average is 18.65)

Nifty historical returns seen from the P/E point of view:



Updated Feb 17, 2016.


images © Craytheon


NIFTY Auto sector PE is 34.87. Long term average is 23.6. Current Auto PE is 47.9% higher than long term average.

The Nifty Auto Index is designed to reflect the behaviour and performance of the Automobiles sector which includes manufacturers of cars & motorcycles, heavy vehicles, auto ancillaries, tyres, etc. The Nifty Auto Index comprises of 15 stocks that are listed on the National Stock Exchange. The Nifty Auto Index represents about 90.69% of the free float market capitalization of the stocks forming part of the Automobiles sector universe as on March 31, 2015.
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Bank Nifty PE is 14.52. Long term average is 12.8. Current Bank Nifty PE is 13.9% higher than long term average.

Nifty Bank Index is an index comprised of the most liquid and large capitalised Indian Banking stocks. The index has 12 stocks from the banking sector which trade on the National Stock Exchange and represents 92.22% of the free float market capitalization of the stocks forming part of the Banking sector universe as on March 31, 2015.
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CNX NIFTY IT PE is 17.91. Long term average is 24.8. Current CNX IT PE is 27.8% lower than long term average.

Companies in this index are those that have more than 50% of their turnover from IT related activities like IT Infrastructure , IT Education and Software Training , Telecommunication Services and Networking Infrastructure, Software Development, Hardware Manufacturer’s, Vending, Support and Maintenance, and represents 96.66% of the free float market capitalization of the stocks forming part of the IT sector as on March 31, 2015.
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NIFTY FMCG PE is 33.90. Long term average is 34.5. Current FMCG PE is 1.8% lower than long term average.

FMCGs (Fast Moving Consumer Goods) are those goods and products, which are non-durable, mass consumption products and available off the shelf. The Nifty FMCG Index comprises of 15 companies who manufacture such products which are listed on the National Stock Exchange (NSE). Represents 82.42% of the free float market capitalization of the stocks forming part of the FMCG universe as on March 31, 2015.

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Infra sector PE is 19.22. Long term average is 23.6. Current Infra PE is 18.5% lower than long term average.

The Nifty Infrastructure Index represents about 9.00% of the free float market capitalization of the stocks listed on NSE and represents 80.74% of the free float market capitalization of the stocks forming part of the infrastructure sector universe as on March 31, 2015.
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Nifty Midcap 100 PE is 21.54. Long term average is 16.6. Current Nifty Midcap PE is 29.9% higher than long term average.

The Nifty Midcap 100 Index represents about 13.86% of the free float market capitalization of the stocks listed on NSE as on March 31, 2015.
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Nifty Junior PE is 20.62. Long term average is 15.2. Current Nifty Junior PE is 36.0% higher than long term average.

CNX Nifty Junior Index represents about 12.02% of the free float market capitalization of the stocks listed on NSE as on March 31, 2015.
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NIFTY Pharma sector PE is 42.03. Long term average is 42.9. Current Pharma PE is 2.0% lower than long term average.

This Index represents 78.29% of the free float market capitalization of the stocks forming part of the Pharmaceutical sector universe as on March 31, 2015. 
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NIFTY PSU Bank Index is 8.39. Long term average is 9.5. Current PSU Bank Nifty PE is 11.6% lower than long term average.

NIFTY PSU Bank Index represents PSU Banks, and  represents 91.81% of the free float market capitalization of the stocks forming part of the PSU Banks sector Universe as on March 31, 2015.


But there's always second thoughts!

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