Decline Due to 'Realignment' Between Stock Prices, Bleak Outlook: Analysts

The sharp decline in valuation since September 2024 also signifies the end of a 25-year cycle of steady equity rerating in India.

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This steady rerating of Indian equities pushed the index trailing P/E from around 16x in the early 2000s to around 18x during the Manmohan Singh regime to nearly 25x at its peak in the post-pandemic era.

The rerating was initially fueled by a sharp rise in the investments by foreign portfolio investors in the early 2000s but in the last decade, the rerating was driven by an influx of domestic retail investors.