With the Sensex at an average of 15,000, India is trading at a 15-18 per cent premium to its average 12-month forward P/E. The last time we traded at comparable valuations was in 2007. Most of the emerging markets are trading at valuations similar to late 2007 and hence there is not much to distinguish India favourably in this comparison. The Sensex P/E has nearly doubled from its trough level in March this year without any significant upgrade in EPS forecasts for FY10. A similar pattern can be observed in many other emerging markets and hence the valuation attractiveness of India is neutral....

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Source: Dalal Street Investment Journal
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