Two-thirds of Nifty 500 stocks trade in overvalued zone

A study by Omniscience Capital reveals that nearly 65% of India's Nifty 500 stocks are overvalued, with the index trading at a high P/E ratio relative to its growth prospects. While financials, utilities, industrials, and energy sectors appear att...

By ET Bureau | Dec 25, 2025, 08.41 AM IST

A study by Omniscience Capital reveals most of India's top stocks are overvalued. Nearly 65% of Nifty 500 companies show high valuations.

Majority of India’s top stocks are overvalued, according to Omniscience Capital. Nearly 65% of Nifty 500 constituents appear overvalued, while the rest 35% are trading fairly or undervalued, said the investment management ﬁrm’s study.

The Nifty 500 index is currently valued at 24.4 times price-to-earnings (P/E), with a growth estimate of about 11%, and relative to the expected earnings growth, the current valuation multiple appears on the higher side, said the report.

Across market capitalisation, large-cap stocks, or the top 100 companies, are trading at a P/E multiple of 22.8 times, while mid-cap stocks, ranked 101 to 250, are trading at 28.1 times.

However, small-cap stocks, which are trading at 29.5 times price-to-earnings and are expected to post earnings growth of about 11.7%, appear overvalued relative to their fundamentals, said the note.

Within sectors, ﬁnancials is the most attractively positioned sector, said the report.

Utilities, industrials and energy sectors also show favourable prospects, while Consumer Staples, Health Care and Information Technology show overvaluation compared to their expected growth.