Indian Stocks Remain Overvalued Despite Global Market Correction

Indian Equity Markets Remain Among the Most Expensive in the World

Despite a sharp correction in the Indian equity markets, valuations continue to tell a different story. The Nifty has fallen 10 percent so far in 2026, while the Nifty 500 index has lost 5.4 percent. However, despite this underperformance relative to global peers, Indian stocks remain among the most expensive in the world.

According to Bloomberg data, the Nifty 500 index, which accounts for nearly 90 percent of India's total listed market capitalisation, has 151 stocks - or 30 percent of the index - trading above 50 times trailing twelve-month price-to-earnings multiples. This is higher than the 148 stocks at such elevated valuations when Indian markets hit their peak in September 2024. At the broader 30 times trailing PE threshold, nearly 52 percent of Nifty 500 stocks currently trade above that level, compared with 54 percent in September 2024.

The picture is even starker within the benchmark Nifty 50. Currently, 14 stocks - or 28 percent of the index - trade above 50 times trailing PE, against 11 stocks at the end of September 2024. At the 30 times threshold, the figure stands at 37 percent today, compared with 30 percent then.

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In contrast, many global indices have rallied sharply over the same period, yet carry far fewer richly valued names. The S&P 500, which has gained over 7 percent so far in 2026, currently has just 50 stocks - 10 percent of its constituents - trading above 50 times trailing PE, up from 27 stocks or around 5 percent at the end of September 2024.

European markets reflect an even more moderate picture. The UK's FTSE 100 has 6 percent of its stocks above 50 times trailing PE, Germany's DAX stands at 13 percent, and France's CAC 40 at just 2.5 percent. Notably, both the FTSE 100 and the CAC 40 had zero stocks above that threshold at the end of September 2024, while the DAX had just five. At the 30 times level, the FTSE 100 has 15 percent of its stocks above that mark, while the CAC 40 and DAX each stand at around 5 percent.

Across Asia, where markets have surged in recent months, valuations have risen but remain more moderate than India's. China's Shanghai Composite now has 25 percent of its stocks above 50 times trailing PE, up sharply from 5 percent at the end of September 2024, while at the 30 times threshold the figure stands at 37 percent compared with 30 percent previously.

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Analysts are divided on what the numbers mean for investors. Saurabh Jain, Head of Fundamental Research at SMC Global Securities, said India's equity valuations continue to raise concern even after the recent correction, particularly in the broader market. He warned that sustained earnings disappointment, persistent macro pressures, or continued foreign selling could trigger a sharper de-rating in richly valued segments.

Veteran investor Prashant Jain offered a more measured reading, stating that valuations across sectors have become more balanced following the correction seen over the last two years. He added that multiples had fallen to reasonable levels after correction in both prices and time, and that there are no deeply undervalued sectors.