Nifty's premium valuations a hit, slip below 5-year average

The Nifty50 Index's valuation has fallen below its five-year average following a significant market decline, marking the largest drop in four years. Closing at 21,884.50 points, the index trades at a price/earnings (PE) multiple of 19.02 times one-year estimated forward earnings, slightly lower than the five-year average of 19.21 times. \r

Despite a 6% plunge in the Nifty50, bond markets saw yields on the 10-year benchmark rise by 9 basis points, while the Indian rupee depreciated by 38 paise against the US dollar. Improved earnings in the March 2024 quarter contributed to maintaining valuations in the range of 18x to 20x over the past year, although the year-to-date return for the Nifty50 has narrowed to just 0.7% following the recent decline.