Mumbai: As the Indian stock market went on an unprecedented bull run amid the pandemic, around two-third of the sectors are currently trading at a premium to their historical averages, showed a report by Motilal Oswal Financial Services.
After the sharp rebound, the Nifty now trades at a 12-month forward P/E (price-to-earning ratio) of 20.7x, 10 per cent above its historical average of 18.8x, said the Bear & Bulls report.
Health care and auto now trade in a reasonable range to their long period average (LPA) valuations, while technology, after the sharp run, trades at a 40 per cent premium to its LPA. Consumer goods still trade at a decent premium to its LPA, but this premium has shrunk in the last one-year.
"Private Financials are trading at a premium to its LPA on a P/B basis. Oil and Gas is trading at 14.1x, at a 17 per cent premium owning to RIL. Excluding RIL, Oil and Gas P/E will be at 8.3x, a discount of 20 per cent to its LPA," it said.
Further, the market capitalisation-to-GDP ratio is at a new year-end high of 106 per cent.
Noting that all sectors delivered positive returns in FY21, the Motilal Oswal report said that the top gainers in the sectoral space were metals (up 151 per cent), autos (108 per cent), technology (103 per cent), capitalgGoods (+92 per cent), and real estate (90 per ecnt), while consumer goods underperformed.
The theme of FY21 was high beta, cyclicals, and value. Quality and defensive themes, the flavor of the past few years, took a breather. The breadth was positive in FY21, with 49 Nifty stocks closing higher, it said.