Nifty valuations at multi-year lows, can fall further in worst-case scenario: Ventura

Nifty 50’s forward price-to-earnings (P/E) ratio has fallen to multi-year lows, as the ongoing market selloff pushes valuations down sharply. The benchmark index’s P/E for 2025 and 2026 now stands at 18.5x and 16.2x, respectively, marking a significant compression in valuation multiples, brokerage Ventura noted.

Historically, Nifty’s forward P/E has seen sharper declines during past market crises, including the Global Financial Crisis (GFC) of 2008 and the COVID 19-induced crash of 2020, when valuations dropped to 10.5x and 15x, respectively. The brokerage warned that if corrective mechanisms are not put in place, the current downturn could mirror past collapses.

Using previous crashes as reference points, Ventura’s analysis outlined possible downside scenarios for Nifty. In a severe correction, the index could drop to 20,510—based on a 15x forward P/E similar to the 2020 COVID 19 crash. In an extreme bear case, where valuations mirror the 10.5x P/E seen in 2008, Nifty could plunge to 14,357. A median scenario would place the index at 17,434, implying a steeper correction ahead.

The market turbulence can be attributed to a combination of global macroeconomic headwinds, including the reversal of US trade policies, fiscal deficit concerns, and a shift toward onshore manufacturing. Liquidity constraints due to quantitative tightening (QT) have exacerbated the downturn, Ventura said.

Adding to investor concerns is the growing risk of a US debt crisis. With government debt soaring to $34.6 trillion—120% of