ET Intelligence Group: Over half of the BSE 500 companies now trade below their three-year and five-year average valuations. The current sell-off in the equity market, which has resulted in a near 13% fall in the benchmark indices since the beginning of 2026, has pulled down valuations over a medium-term horizon. However, when seen on a longer horizon of 10 years, 60% stocks still trade above the decade-ago valuations. Amid rising concerns over the consequences of the latest Iran-Israel conflict, the benchmark domestic equity indices have been trading near their 11-month lows, which has affected overall valuations. This more so in the case of non-lending companies as the majority of banks and financial companies have shown resilience by retaining valuations above their three and five-year averages. Three out of every four of the lending enterprises in the sample continue to trade above their long term price-book (P/B) multiples. In case of banking and finance companies, price-book (P/B) multiple provides relevant information about relative valuation. It is calculated by dividing the share price by the book value.
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A majority of BSE 500 stocks below 3-year and 5-year average valuations; however, 60% still trade above long-term numbers
In case of non-lending companies that include manufacturing, services and trading enterprises, 56% companies trade below their three-year price-earnings (P/E) multiples while 42% look less expensive than what they were a decade ago. A P/E multiple is calculated by dividing the share price of a company by its earnings per share (EPS). When compared with the historical data, the P/E multiple offers insights on relative valuation of the stock.
In addition, nearly three out of every four stocks in the total sample trade below their respective 200-day moving averages, reflecting bearish sentiment in the market.
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