Half of the Nifty 50 stocks, excluding financials, are trading at single-digit valuations as Indian equity markets are nearly one-third off record-high levels they scaled in January.
The coronavirus pandemic, which resulted in the world's biggest lockdown and threatens slowest growth since the global financial crisis, led to this fall in markets.
Currently, of the 41 ex-financial Nifty 50 stocks, 21 are trading at single digit 12-month forward price-to-earnings ratio. Commodity—metal and oil—stocks are the ones with the lowest valuations in the list, according to Bloomberg data.
Metal stocks like Vedanta Ltd., Hindalco Industries Ltd., Coal India Ltd., Tata Steel Ltd. and JSW Steel Ltd. are trading at lower valuations due to slumping metal prices and demand. Similarly, oil and gas stocks like ONGC Ltd., Indian Oil Corp. Ltd. and GAIL (India) Ltd. are trading at trough valuations due to lower oil and gas prices, lower demand and lower margins.
Auto stocks—Tata Motors Ltd., Mahindra and Mahindra Ltd. and Hero Motocorp Ltd.—also trade at cheap valuations. While lacklustre sales of Jaguar Land Rover in China and elsewhere impacted valuations of Tata Motors, M&M and Hero MotoCorp were hurt by lower sales at home due to the lockdown.
Zee Entertainment's valuations have been lower due to weak business outlook, given the economic slowdown, pending receivables from group companies, news related to the investigation conducted by MCA, and TRAI's proposed tariff order changes.
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