Sensex so far: what goes up must come down?

Saturday, March 08, 2008 | | |

Mumbai: Soaring returns from India’s bellwether equity index, the Sensex, made it the toast of global investors in recent years. These days, investors betting on the same Bombay Stock Exchange’s index are being toasted.
The Sensex has lost at least 21% so far in 2008 alone, the biggest loser among major Asian indices. This compares to gains of at least 45% in both 2006 and 2007.
However, even after a dismal start, the average price-earnings multiple of Sensex stocks is at a high 21.58, the second highest in Asia behind China. The P-E of China’s benchmark index, which is down 18.27%, is pegged at 36.03.
While this could portend more pain for investors, some analysts are starting to say current price levels are attractive.
“Indian stocks are more attractive after the fall, (given) their earnings potential,” says John Levack, the Hong Kong-based managing director of Electra Partners Asia Ltd, the Asian arm of a large UK-based private equity firm.