Indian equity market most expensive after China

Following the 2,000-point (14%) correction in the Sensex, the P/E has fallen 18 times the one-year forward earnings. While that may provide some relief to investors, it has reinforced the fact that the Indian equity market is the most expensive emerging market after China.

After the recent bullishness among its industries, Japan’s benchmark index - Nikkei 225 - is trading at 22 times the one-year forward earnings. Little wonder then that money has been flowing out of these markets.According to EPFR.com data, outflows from India and other emerging markets so far are nearly 50% of their investments into them.

The depth of the Indian market has been questioned by many FIIs. Even though the Indian equity market has seen a correction in line with other emerging markets, the spiralling effect is scary. Part of the reason is because small investors, who are more like speculators, invest directly into the equity market.

Read more inThe Economic Times article.