Coronavirus outbreak eats into stock valuations, market plunges 34%

Stocks whose outlook is better haven’t got much cheaper. For instance, Nestle India, Hindustan Unilever, Asian Paints, and Britannia still quote valuations of more than 40 times.
The Indian stock market has plunged 34 per cent from its record high. As a result, the price-to-earnings (P/E) ratio for the Nifty50 index has declined to 12.3 from 18 at the start of the year. The Nifty’s valuation is still slightly above the 2008-09 global financial crisis trough level, when it had fallen to 11.

 
However, a record 50 per cent of the Nifty stocks are currently trading at a single-digit P/E ratio. So, is this a good time for bargain hunting? Experts say such low valuations are a signal that the market is pricing in huge disappointment in earnings due to the demand shock created by the lockdowns to contain Covid-19.

 
Stocks whose outlook is better haven’t got much cheaper. For instance, Nestle India, Hindustan Unilever, Asian Paints, and Britannia still quote valuations of more than 40 times.

 



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