Indian Stock Market Valuations and Earnings Disappointments: Insights from the MC Market Poll
High Valuations and Earnings Disappointments in the Indian Stock Market
While a combination of concerns is affecting investor sentiments leading to increased volatility in the stock markets, the biggest risk facing the Indian stock market is high valuations followed by earnings disappointments and geo-political risks, reveals a latest market poll by Moneycontrol.
This assumes significance as the poll findings reveal that experts do not see the 'sell India, buy China' factor among the top three risks and clearly believe that domestic or internal concerns have a much bigger role in influencing investor sentiments.
Poll Findings and Market Expert Insights
According to the Moneycontrol market poll findings, 44 percent of the experts believe that high valuation of the Indian markets is the primary concern, with 36 percent of the respondents saying that earnings disappointments are the biggest risk. Only around 20 percent of the respondents point to geopolitical tensions as the main factor weighing on the market.
Performance and Emerging Trends
The Nifty 50 has delivered a return of 17.35 percent so far in 2024. Over the past five years, its annual returns have been 14.9 percent in 2020, 24.12 percent in 2021, 4.32 percent in 2022, and 19.42 percent in 2023. Furthermore, India has seen its weightage in the MSCI Emerging Markets Index increase due to factors such as relaxed foreign ownership limits and a surge in IPO activity.
Market Dynamics and Future Outlook
In 2023, 243 companies – mainboard and SME combined -- went public on Indian exchanges, and the IPO momentum remains strong in 2024, with several more listings expected in the coming months. However, analysts warn of overlooked risks from high valuations driven by the pursuit of returns over caution.
As market trends evolve, the Kotak Institutional Equities report advises caution, indicating that while past returns have been strong, these gains could erode as stock prices realign with fair valuations.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.