Is the Indian stock market fairly valued or overvalued? Experts weigh in

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Nifty 50 tops 23k mark; can Indian stock market sustain gains? Experts weigh inMany experts believe the Nifty 50 is currently overvalued, and a negative surprise in the Lok Sabha election results could trigger a significant market correction. However, if the election outcome aligns with expectations and India's economic growth maintains its momentum, the Nifty 50 may sustain its current valuation.Mint spoke to several experts to take their views on the current valuation of the Indian stock market.

Here's what they said:Jasani pointed out that the Nifty quotes at nearly 21 times FY25E EPS and, going by historical trends, is currently at the top end of the valuation. Also, according to the market-to-GDP ratio, the Indian stock market is at 1.4 times.

Indian markets are, hence, not cheap and are tilting towards the expensive side, he added. However, Jasani believes the ensuing event (outcome of the Lok Sabha election 2024) and the expectations built around the post-government formation policy thrust and FPI inflows have led to these valuations.

“If these come out on expected lines and the monsoon proves normal in intensity and spread, Nifty EPS may be upgraded, and the valuations may seem more reasonable," said Jasani.Also Read: General Elections 2024: How different poll outcome scenarios may impact equity, forex and bond marketsJain said the Indian stock market is currently trading at a premium, reflecting expectations of strong growth after Prime Minister Modi's potential re-election. This optimism has pushed valuations higher.

However, a correction might occur after the election results, said Jain. Corporate earnings will likely drive long-term growth, particularly in manufacturing and other sectors that could benefit