Fewer shares mean higher valuations, too
by Nish Kotecha/ DNA Money
India is the most expensive market in Asia followed closely by Hong Kong.
The Indian stock market's stellar run up since the start of 2006 by some 20% (even after falling 3.6% in the last week) raises the question: Are we in a bubble or is there more left in the fuel tank to propel the market higher?
While there are many factors that influence the value of individual stocks and the market as a whole, liquidity is the most powerful. Brokers estimate that the BSE Sensex trades at a financial year 2007 earnings multiple of 17 times (current price divided by forecast earnings). This places India in pole position as the most expensive market in Asia followed closely by Hong Kong at 15.5 times the forward earnings, even though the corporate growth levels expected from Hong Kong are higher than India for the same period. Indian stocks are clearly expensive, but are they likely to get cheaper?
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