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India is now the most expensive equity market in the world, and “no amount of handwaving” can justify its current valuation levels, according to “Valuation Guru” Aswath Damodaran. The finance professor from New York University and globally renowned expert on valuation recently shared his analysis, sounding a cautionary note for investors drawn to Indian equities.
Damodaran pointed out that Indian stocks trade at a premium far beyond global averages. “India trades at a staggering 31 times earnings, 3 times revenue, and 20 times EBITDA in aggregate,” he wrote in his blog. These metrics, he explained, place India among the priciest markets globally, alongside China and the United States.
While high-growth markets like India often command a premium, Damodaran argued that these valuations need to be backed by equally strong earnings growth to be justified. He added, “At the wrong price, even the safest market with great historical returns are bad investments.”
The Nifty 50 and Sensex have outperformed global benchmarks over the past decade, driven by robust corporate earnings, policy reforms, and a growing retail investor base. However, Indian equities remain expensive across all valuation measures, even after cooling off in 2024 with single-digit price appreciation.
Damodaran also highlighted broader global trends affecting equity markets, including rising nationalism and trade wars, which he believes have created new risks for investors. “Trade wars (and tariffs) will make the world collectively less well off, but like all global shocks, they will create winners and losers,” he remarked on X, formerly known as Twitter.
The professor noted the impact of the strengthening U.S. dollar, which gained 9.03% in 2024, and inflation expectations that continue to influence global risk-free rates. These factors, he argued, further complicate the outlook for emerging markets like India.
As Indian equities continue to draw global attention, Damodaran’s message is clear: while the country’s growth story is compelling, paying a steep price for that narrative might lead to disappointing returns for investors.
Copyright©2025 Living Media India Limited. For reprint rights: Syndications Today
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‘No amount of handwaving…’: Aswath Damodaran calls India most expensive equity market – Business Today
