India outperforms emerging markets, but valuations still pricey

By Ramanatha Pai and Biswajit Baruah

The Indian equity market has fallen 6.27% this year so far; but when compared with other global stock markets, it’s relatively better placed and have outperformed most of the larger markets. In the emerging markets space, China's Shanghai Composite has dropped 15% in 2016 so far, while Russia and Brazil has declined 11% and 12%, respectively. India has also outperformed developed markets.

US Dow Jones Industrial Average has fallen 8.25% in 2016; while in Europe, France’s CAC has declined 7.3% and Germany’s DAX 9.3%. However, when it comes to market valuations, India appears a tad expensive in the emerging markets space. India is trading at 18.32 times based on trailing 12-months earnings, while China is trading at 15.38 times and Russia at 7. And when compared with developed markets, India appears to be relatively better placed in terms of valuation, as the US is trading at 14.10 times, France 19 times and Germany at 20 times to their trailing one-year earnings.