To buy or not to buy? A decision made tougher by the fact that despite earnings growth lagging, at around 17 times forward price earnings (PE) multiple, benchmark equity indices are trading at or just above the 10-year average. In other words, markets are at fair value even though corporate earnings aren’t firing yet.
The PE multiple tells you how much investors are willing to pay per rupee of earnings. A low PE multiple indicates that you won’t be willing to pay a high price to own a stock. A higher value usually indicates that there is a willingness to pay a premium for a stock. However, a high PE or high valuation can also make you question if you might be paying too much.
