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The Nifty now trades at an estimated Price to Earnings (PE) ratio of 20.5 times and price to book of 3 times, which is above the long-term average.

Synopsis

Among the Nifty 200 companies, 49 have seen earnings downgrades for FY22 of late compared to 35 upgrades. Out of the Nifty 500 stocks, 78 have seen downgrades compared to 64 upgrades in the last four weeks. Nifty’s earnings per share (EPS) estimate for FY22 has seen 1.1% cut to ₹725 from ₹733. Investors evaluate the prospects of shares on the basis of earnings estimates.

Mumbai: The negative effects of the lockdown on businesses on account of the second wave of coronavirus are beginning to show on analysts’ profitability expectations of Indian companies. Downgrades in earnings estimates by analysts at leading brokerages have outnumbered upgrades in the past four weeks. But analysts say the extent of downgrades after the second Covid-19 wave starting April could be less drastic than those in 2020 as the lockdowns

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