Friday, April 4, 2025

Sensex trading at high PE, caution advised for fresh investments

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Shillong, August 1: The Sensex is currently trading at 25 times trailing one-year earnings, and it’s crucial to note that the rally is driven by price-to-earnings (PE) expansion rather than significant earnings growth, according to V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

As per IANS, while the US market’s resilience is supporting global markets, the rally is pushing valuations to uncomfortable levels. The first-quarter earnings growth for FY 24 is muted, except in banking and refineries, indicating that rural demand is yet to pick up significantly.

Despite the Indian economy being in a favorable position, investors are urged to exercise caution in fresh investments, particularly in chasing low-grade small-caps.

The Sensex is currently down 16 points at 66,511 points, mainly due to losses in Powergrid, which is down by a massive 5 per cent.

Anand James, Chief Market Strategist at Geojit Financial Services, shared the Nifty outlook, suggesting that the market may regroup in the 19770-840 region. However, he believes that the upside momentum should prevail, with the potential for a flag breakout leading to a trajectory towards 20600.

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