4 charts that sum up Indian equity markets in FY2015

India Share Market in FY2015

  • In FY2015, India share market were propped up by a combination of a decisive political majority, lowering inflation from falling crude prices and persistently low interest rates in the developed world
  • Apart from commodity sectors like Oil & Gas and Metals, all other sectors and sub-indices have provided positive returns this past year
  • However, Earnings growth, the key driver of share prices, has remained elusive as shown by the 20% increase in Nifty PE explaining most of the 24% rise in the index. We’ve seen in a previous post, current PE has some impact on returns
  • A broad-based pick up in demand translating to significant earnings growth will be required for markets to sustain themselves, else historical data suggests negative 1 year returns at current valuations

Four charts that sum up markets this past year

1. Both benchmark indices up by over 24% in FY2015

(Interactive chart – click on different durations on top left of chart to zoom in)

2. Healthcare, Consumer Durables, Small & Mid caps top performers in FY2015

The Calm Investor | FY2015 Index Returns | India Share Market

 

 

 

 

 

 

 

 

 

 

 

3. Nifty has become more expensive, from 19x to 23x Earnings, a 20% increase

4. Historical 1 year Nifty returns at above 23x Earnings have been negative

The Calm Investor | NIFTY Returns | India Share Market

 

 

 

 

 

 

 

 

 

 

 

What do you think?