On valuation, Indian stocks are pricey compared to the broader emerging markets complex, but not relative to India’s historical averages.
“Absolute valuations of the S&P BSE Sensex 30 stock index (as proxied by MSCI India) would appear to justify some exposure to the country’s equities. At 16.3x one-year forward earnings, India’s positive-adjusted, price earnings multiple (p/e) is well below its record high (38.4x), just 8.8 points above its all-time low, and immaterially different from its historical average (16.7x). On the other hand, it trades at a premium to most of its regional rivals, except the Philippines, Indonesia and Malaysia,” said S&P Capital IQ.
The MSCI Emerging Markets Index trades at less than 12 times forward earnings.
A 21.1% allocation to tech stocks, which held well even when the rupee was weak, has the iShares MSCI India ETF (NYSEArca: INDA) looking pricey at a P/E of 28.56 and a price-to-book ratio of 5.26.
However, INDA is up about 30% this year and is one of two India ETFs that made a new 52-week Thursday. S&P Capital rates the $1.3 billion INDA marketweight.
WisdomTree India Earnings Fund
