- Nifty 50 trades at 19.1 times trailing earnings, below its long-run median of 20.9 times
- Foreign investors have sold a net Rs 3.08 lakh crore of Indian equities in 2026
- Nifty's FY27 earnings estimates cut by about 9% amid rising crude and rate concerns
The Nifty 50 now trades at about 19.1 times trailing earnings, below its long-run median of around 20.9 times. By that yardstick, Indian equities look cheaper than they have in years.
Foreign investors are not buying it yet. They have sold a net Rs 3.08 lakh crore of Indian equities in 2026, per NSDL, and the Nifty is about 15% below its January record of 26,373.
WealthMills Securities' director for equity strategy, Kranthi Bathini, says the discount is real but not enough on its own. “Attractive for a longer-term perspective,” he told NDTV Profit, when asked whether a P/E below the median is cheap given the risks to earnings growth. For a short-to-medium term perspective, he tied the call to growth visibility.
How Cheap Is Cheap?
The Nifty's trailing P/E stood at 19.12 on Tuesday, according to NSE data. That is about 8.5% below the 20.88 median over its full history, and about 13% below its five-year median of 21.95.
The multiple has come down sharply. Over the last five years it has fallen from 27.5 to about 19.1, the same data show. The index is down about 11% over the past year.
The discount is also what Bathini points to when he talks about what could bring foreign money back. He said it comes down to two things: relative valuation and growth visibility.
Where Visibility Is Missing
This is where he sees the catch. Earnings estimates have been trimmed through the year. FY27 consensus EPS for the Nifty has been cut by about 9% over 12 months, from Rs 1,357 to Rs 1,235, reports said last month, citing JM Financial and Bloomberg data.
The pressure comes from outside. Brent crude is around $105 a barrel, against about $60 at the start of the year. The US 10-year yield touched 5.34 per cent on October 1, its highest since 2002. The rupee has weakened from Rs 90-91 to the dollar at the start of the year to the mid-90s, which eats into dollar returns for foreign investors.
Bathini has linked the outlook for large-caps to whether elevated crude and the rate-hike cycle persist. “The comfort for the market in the medium to short term is crude oil,” he said. He added that India lacks the “wow factor” needed to attract hot money while global equities chase momentum.
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What The Numbers Say Now
The earnings season has started on a better note. Morgan Stanley expects Nifty revenue growth to accelerate to 19% quarter-on-quarter in the September quarter, up from 18% in the previous three months, with all 10 sectors registering positive revenue growth led by energy, consumer discretionary, and industrials.
If those estimates hold, then Nifty's delivery on the earnings front would be in line with what the trailing P/E indicates.
But the estimates have been cut before. Whether they hold depends on crude, rates and the rupee, which is why analysts keeps coming back to geopolitics and the Middle East.
Where The Value Lies
For investors who want to act now, Bathini suggested accumulating pharma and healthcare, defence, and engineering and capital goods, including power. Autos and auto ancillaries are good for buying on dips, he said.
This week, he is watching geopolitics, crude oil and the Middle East, along with the earnings season. On the charts, he said on Monday that the previous low cannot be violated and the market needs to maintain 22,500. The Nifty closed that day at 22,363.35, below the mark, before bouncing back above it in Tuesday morning trade.
Notably, a P/E of 19 gives the market a cushion that it did not have a year ago. What it does not give is a reason for foreign investors to return. For that, Bathini's answer is the same as the one he gave on what would bring them back, which is valuations that look cheap against other markets, and earnings growth that investors can see.
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