India is the most expensive stock market in the world

New Delhi, Sep 23 Even after the recent correction, Nifty is trading around 20 times FY 24 earnings, making India the most expensive market in the world, says V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

FPI selling which started early this month continued in the week ended September 22. This month, in the 15 trading days, so far, FIIs were sellers in eleven days. As per NSDL data, in September through 22nd, FPIs sold equity for Rs 10164 crore. This figure includes bulk deals and investment through the primary market. In the cash market FII selling was Rs 18260 crores, so far this month, he said.

Since valuations remain high even after the recent pull back and US bond yields are attractive ( the US 10-year bond yield is around 4.49 percent) FIIs are likely to press sales so long as this trend persists. It would be irrational to expect the FIIs to buy aggressively when the US 10-year bond yield is around 4.49 percent and the dollar index is above 105, he added.

Even after the recent correction, Nifty is trading around 20 times FY 24 earnings, making India the most expensive market in the world. No doubt, India has the best growth and earnings prospects among the large economies of the world. So, if the markets correct further, by say 3 to 4 percent, FIIs can turn buyers even if US bond yields remain high, he added.

FII selling can be an opportunity for domestic investors who don’t have to worry about the dollar index and US bond yields. When high quality stocks in performing sectors like banking and capital goods decline, these can be bought for handsome long-term gains.

In September, so far, even while selling in the market, FIIs were big buyers in financials and capital goods, he said.