Is the Indian Share market overvalued?

Is the Indian stock  market overvalued?

At the bottom of the unease 
with the rally is the fact 
that the market has diverged from 
“the fundamentals”. 
It is solely liquidity that is driving the market up.

Indian markets have been far from immune to the massive flows of liquidity spilling over from the unconventional monetary policies adopted by central banks in the advanced economies. 

But are they overvalued? A look at chart 1 certainly gives reason for disquiet. It compares Bloomberg’s earnings estimates for 2016-17 for the Sensex from 2016, 1 April till date, 
with the value of the SENSEX. 

Both the earnings estimates and the SENSEX have been rebased to 100 as on 2106 1 April.


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