P/E & CAPE Ratio India Stock Market (NIFTY 50)

The current P/E (price-earnings) ratio of India’s NIFTY 50 stock index is 38.45 (12/31/2020). The CAPE ratio of the India’s stock market, calculated using the same index, is 29.91. Both ratios are considerably higher than the historical averages which might indicate the the Indian equity market is currently overvalued.

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[Nifty 50 Index] – P/E (TTM), Forward P/E & CAPE Ratio

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NIFTY 50 stock index

NIFTY 50 consists of fifty major companies listed on the National Stock Exchange of India. It is considered as a benchmark index for the performance of the Indian equity market. The index is free float market cap weighted, just like the S&P 500. The largest sector of NIFTY 50 is Financial Services, followed by Information Technology. The three largest components are HDFC Bank, Housing Development Finance Corp and ITC. The index was launched in April 1996.

India CAPE ratio Nifty 50 Shiller PE
There exists a negative correlation between the historical CAPE ratio of the index and forward returns. This would suggests that Shiller PE could be used to evaluate the valuation level of India’s stock market. Note that the axis of the forward return is reversed.

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