Sensex at discount to Dow for first time since 2009

A FIRST IN 16 YRS

- Krishna Kant

A selloff on Dalal Street in the past five months has ended a long run of India's valuation premium over the US equity market. The benchmark BSE Sensex trailing price-to-earnings (P/E) multiple has slipped below the earnings multiple of the Dow Jones Industrial Average for the first time since 2009.

The Sensex is currently trading at 21.8x its underlying earnings per share over the past 12 months, down from a P/E multiple of 23.8x at the end of March last year.

In comparison, the Dow is trading at a P/E multiple of 22.4x, slightly down from 22.8x at the end of March last year, according to data from Bloomberg.

In the past two decades, the Sensex has traded at nearly a 25 per cent premium to the Dow valuation on average. The Sensex median trailing P/E has been 21x since March 2005, compared to the Dow median P/E multiple of 16x during the period.