India's Equity Markets Lead in Valuation Metrics

According to a recent report by Nuvama Institutional Equities, Indian equity markets continue to be the most expensive globally, even after recent corrections. The brokerage points out that India's 12-month forward price-to-earnings (PE) ratio is at 23.3, the highest among major developed and emerging markets, and 1.6 standard deviations above its 10-year average.

Comparative Analysis with Global Markets

When compared, the United States follows with a PE of 22.4 and PB of 4.7. Other emerging markets like Taiwan, Philippines, and Indonesia are trading at substantially lower valuation multiples, highlighting India's premium valuation.

Strong Fundamentals Amid High Valuations

Despite these high valuations, India's fundamentals remain robust with a projected return on equity (ROE) for FY25 at 15.6%. However, the dividend yield remains among the lowest globally, potentially limiting its appeal for income-seeking investors.

Future Outlook

Nuvama notes that Indian equities have been under pressure for the last 10 months, with valuations remaining elevated. This could constrain further upside, especially amid global market volatility or domestic policy shifts.