Valuations ease after sell-off, yet stay relatively elevated

ET Intelligence Group: Over half of the BSE 500 companies now trade below their three-year and five-year average valuations. The current sell-off in the equity market, which has resulted in a near 13% fall in the benchmark indices since the beginning of 2026, has pulled down valuations over a medium-term horizon. However, when seen on a longer horizon of 10 years, 60% stocks still trade above the decade-ago valuations. Amid rising concerns over the consequences of the latest Iran-Israel conflict, the benchmark domestic equity indices have been trading near their 11-month lows, which has affected overall valuations. This more so in the case of non-lending companies as the majority of banks and financial companies have shown resilience by retaining valuations above their three and five-year averages. Three out of every four of the lending enterprises in the sample continue to trade above their long term price-book (P/B) multiples. In case of banking and finance companies, price-book (P/B) multiple provides relevant information about relative valuation. It is calculated by dividing the share price by the book value. A majority of BSE 500 stocks below 3-year and 5-year average valuations; however, 60% still trade above long-term numbers In case of non-lending companies that include manufacturing, services and trading enterprises, 56% companies trade below their three-year price-earnings (P/E) multiples while 42% look less expensive than what they were a decade ago. A P/E multiple is calculated by dividing the share price of a company by its earnings per share (EPS). When compared with the historical data, the P/E multiple offers insights on relative valuation of the stock. In addition, nearly three out of every four stocks in the total sample trade below their respective 200-day moving averages, reflecting bearish sentiment in the market. (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price ...moreless (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price ...moreless Why gold volume is plunging in GIFT City when prices soar SaaS faces an AI shake-up. An opportunity for Indian IT? As countries trade gold for guns, can Indian defence stocks be quiet winners? Looking for a job? This city has plenty, few takers Stock Radar: JSW Energy stock gives a breakout from a symmetrical triangle pattern; what should investors do? Buy, Sell or Hold: Motilal Oswal maintains Buy on VA Tech Wabag; sees over 20% upside in RIL 1 2 3