FE Editorial : Emerging truths
The Shanghai Composite, on the other hand, has lost 6.67%. Indeed, with fund managers in risk-on mode and showing an appetite for EM equities, fund flows into India have crossed $18.5 billion, with the Korean markets attracting a shade under $12 billion. At levels of 18,471, the Sensex now trades at around 14.5 times one-year forward earnings—slightly below the long-term average of 15 times—and is more than fairly valued. Unless western economies see very large amounts of liquidity in the near future, it’s unlikely the Indian markets will head up further.
For one, the macroeconomic environment isn’t encouraging and, with the reforms process all but stalled, corporates aren’t willing to invest, so the capex cycle isn’t about to turn in a hurry. Corporate earnings in the September 2012
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