India’s valuation relative to EMs still less pricey than before, show data

Indian stocks may still have room to run, if the historical price-earnings ratio against their emerging market (EM) peers is any guide.

While the S&P BSE Index is near the most expensive on record, its premium over the MSCI EM Index is only around 45 per cent, below its five-year average and down from 76 per cent in 2018.

Foreign investors have bought a net $6 billion of Indian shares this year — the only inflows to an emerging Asia market outside of China.

“The broader market is still fairly undervalued,” said Sumeet Rohra, a fund manager at Smartsun Capital Pte in Singapore, adding that gains have been concentrated in a small number of stocks.

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