India market valuation discount to US widens

Nifty 50 trading at 20% discount, highest in 17 yrs

- KRISHNA KANT

Listed equities in India have lost their premium over their global peers and the valuation discount is widening, which is a reversal, given the historically high valuation here compared to other major markets.

The Nifty 50 index is now trading at a nearly 20 per cent discount in valuation to the S&P 500, close to the highest in the past 17 years.

For example, until two years ago, the Nifty 50 used to trade at a premium to the United States (US) benchmark equity index. It is now trading at a trailing price-to-earnings (P/E) multiple of around 23.4x compared to the S&P 500 trailing P/E multiple of around 28x.

For comparison, the Nifty 50 was trading at a trailing P/E multiple of 22.6x at the end of November last year, while the S&P 500 was trading at a trailing P/E multiple of 27x a year ago.

Historically, the broader equity market has mostly traded at a premium to the US market during the better part of the last 20 years.