India equity valuations fell to their lowest level in six years as stocks declined, but they remained roughly twice as expensive as emerging-market peers on a forward earnings basis as of October 26, 2026.
Key Takeaways
- The MSCI India Index traded at about 18.5 times expected earnings over the next 12 months, its lowest multiple since May 2020.
- In dollar terms, India’s Sensex and Nifty were down 18%–19% so far in 2026, while MSCI India had fallen 15.4%.
- The MSCI Emerging Markets Index traded at 8.7 times forward earnings.
India equity valuations retreat
The dollar-denominated MSCI India Index’s forward price-to-earnings ratio was down from 22.5 times at the start of 2026 and below its 10-year average of 19.7 times. It reached a record 24.54 times in September 2024, when the Sensex and Nifty hit all-time highs.
The recent market decline occurred alongside foreign selling, a weaker rupee, higher crude prices and rising US bond yields. The figures do not establish how much each factor contributed to the fall.
| Item | Details |
|---|---|
| MSCI India | 18.5 times forward earnings; 10-year average 19.7 times |
| MSCI Emerging Markets | 8.7 times forward earnings; 10-year average 12.05 times |
| MSCI US | 18.8 times forward earnings; 10-year average 19.2 times |
| Taiwan | 16.8 times forward earnings; 10-year average 15 times |
| Japan | 15.4 times forward earnings; 10-year average 15 times |
| China | 9.2 times forward earnings; 10-year average 11.5 times |
How India compares with other markets
The emerging-markets index’s forward multiple fell from 13.3 times at the start of the year to 8.7 times, below its 10-year average of 12.05 times. India has historically traded at a premium to its peers, reflecting factors including its relatively stable corporate earnings outlook and broad-based market.
Saurabh Patwa, head of equity and portfolio manager at Quest Investment Managers, cautioned against prescribing a fixed India-to-emerging-markets premium as fair value. He said a meaningful premium could be justified where businesses deliver durable, superior earnings growth.
Earnings estimates remain a concern
Vivek Iyer, partner and chief investment officer at Rational Equity Asset Management, said the Nifty’s apparent cheapness depends on forward earnings estimates. He expects further cuts to consensus estimates given crude prices, which would make the underlying multiple higher than the headline figure.
Iyer described the recent decline as primarily a large-cap de-rating, saying mid- and small-cap stocks still traded at a 50%–70% premium to their historical medians. He also said valuation compression had been concentrated in crude- and rate-sensitive businesses, including oil marketing companies, paint makers, automakers, airlines, cement companies and lenders.
Read More News
Disclaimer
This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.
Comments
Be respectful. No spam, impersonation or private credentials. Ordinary posts and comments appear immediately; suspicious links are held for review.
Please wait…