Sensex Ends 311 Points Lower; Consumer Durables And Energy Stocks Witness Selling

Indian share markets witnessed selling pressure throughout the day and ended their trading session lower. Barring telecom sector and realty sector, all sectoral indices ended on a negative note with energy stocksconsumer durables stocks, and FMCG stocks losing the most.

At the closing bell, the BSE Sensex stood lower by 311 points (down 0.9%) and the NSE Nifty closed down by 83 points (down 0.8%). The BSE Mid Cap index and the BSE Small Cap index ended the day down by 1%.

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 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.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up 1.6% and the Shanghai Composite was up by 2.7%. The Nikkei 225 was up 1.8%.

1 2 3
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.