ICICI Pru AMC has mapped the equity valuation index and this is what it says –
With valuations moving from red to yellow post recent corrections, we believe it is a good time to be constructive on equities.
Please note: Equity Valuation index is calculated by assigning equal weights to Price-to-Earnings (PE), Price-to-Book (PB), G-Sec*PE and Market Cap to GDP ratio. G-Sec – Government Securities. GDP – Gross Domestic Product; Asset Allocation – Schemes that invest both in equity and fixed income.
As can be seen in the graph above, the valuation index has come down to a comfortable level of 104.06, hence, indicating a good time to invest in equities.
Global Markets Performance
Globally, markets ended in negative terrain primarily due to trade tensions and recession fear. In the UK, worries around Brexit also added to the pain.
India outperformed its global peers by ending marginally negative (-0.4%).
Below graph depicts absolute returns for global indices calculated between July 31, 2019 – August 31, 2019 –
Globally, markets remain watchful due to the following concerns –