Indian equity markets face a downturn as valuations adjust following a sell-off, though they remain relatively high compared to historical benchmarks. The BSE 500 index has seen many companies trade below their historical valuations, particularly in non-lending sectors. Banks and financial firms, however, have shown resilience, maintaining valuations above their three- and five-year averages. Market sentiment remains bearish, with investors closely monitoring these shifts. The recent sell-off has driven benchmark indices down nearly 13% since the start of 2026, pulling valuations lower over a medium-term horizon. However, when viewed over a longer 10-year period, 60% of stocks still trade above their decade-ago valuations. This divergence highlights the complexity of current market dynamics. The ongoing Iran-Israel conflict has further exacerbated concerns, pushing domestic equity indices to trade near their 11-month lows. Non-lending companies, which include manufacturing, services, and trading enterprises, have been disproportionately affected. Among non-lending firms, 56% trade below their three-year price-earnings (P/E) multiples, while 42% are priced lower than their levels a decade ago. The P/E ratio, calculated by dividing a company’s share price by its earnings per share (EPS), provides insight into relative valuation. Meanwhile, nearly three-quarters of the total sample trade below their 200-day moving averages, reinforcing the bearish outlook. Banks and financial companies have fared better, with three out of every four lending enterprises in the sample trading above their long-term price-book (P/B) multiples. The P/B ratio, derived by dividing the share price by the book value, is a key metric for assessing relative valuation in the banking sector.#indian_equity_markets #iran_israel_conflict #bses_500_index #non_lending_sectors #banks_and_financial_firms
