Sensex Ends 151 Points Lower; Healthcare & Energy Stocks Witness Selling

Indian share markets witnessed selling pressure throughout the day and ended marginally lower. Barring IT sector, all sectoral indices ended on a negative note with stocks in the healthcare sectorenergy sector and capital goods sector witnessing maximum selling pressure.

At the closing bell, the BSE Sensex stood lower by 151 points (down 0.4%) and the NSE Nifty closed down by 55 points (down 0.5%). The BSE Mid Cap index and the BSE Small Cap index ended the day down by 1.5%.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was down up 0.6% and the Shanghai Composite was up by 1.4%. The Nikkei 225 was down 2%.

The rupee was trading at 71.15 against the US$.

Speaking of the Indian share markets, note that while the Sensex is below its all-time high level of August 2018, it is still above the level it traded a year ago.

And if you increase the time frame to five years, you will realize that the Sensex has gained about 73%, compounding at an annual rate of 11.6% (excluding dividends).

And how has the valuation of the index has moved over the last five years?

The chart below shows how the Sensex price to earnings ratio has moved over the last five years...

The Sensex Is Far from a Bargain Yet

Here's what Ankit Shah wrote about this in today's edition of The 5 Minute WrapUp...

  • As you can see, the Sensex price to earnings ratio has mostly been in a rising trend over the last five years, except for some intermittent declines.

    So, looking at the Sensex valuations, the markets don't appear attractively priced right now. But as I've mentioned time and again, the Sensex tells a very a selective, skewed story of just the 30 largest companies.

    It does not reflect the conditions of the broader markets, which have witnessed quite a tumultuous ride. Consequently, the rest of the markets also have more attractive buying opportunities than the Sensex companies.
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