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Indian Stocks Stall: 2 Years of Mixed Returns
28 Sep
Summary
- Indian equities faced uncertainty for two years since late 2024.
- Nifty and Sensex declined, while mid and small-cap stocks offered gains.
- Indian market valuations are now lower compared to global peers.
Since September 2024, Indian equities have experienced a prolonged period of uncertainty and modest returns. The Nifty has seen an 11.6% decline and the Sensex a 13.6% drop over this 24-month span. However, pockets of the market, particularly mid and small-cap stocks, have offered intermittent gains, with the Nifty Midcap 150 up 0.3% and the Nifty Microcap 250 up 2.8%.
This challenging phase has led to a cooling of valuation froth. The Nifty now trades at a Price to Earnings ratio of 20.9 times, below its five-year average. Furthermore, India's valuation against major global markets has narrowed, trading at 18.5 times forward earnings, below the Nasdaq, S&P 500, and Dow. Despite these more attractive valuations, global investors are hesitant, lacking a concrete trigger for substantial investment.
