Valuation of Indian equities currently too high: RBI

MUMBAI: The valuation of Indian equities is currently too high by traditional standards. The valuation of equities is high based on criteria such as price-to-earnings ratio and difference in yield with benchmark bonds, a report by the Reserve Bank of India reiterated. Earlier, Reserve Bank Governor Shaktikant Das had expressed the same view.

Trends in increasing shareholding by promoters indicate a growing confidence in their business. The overall demand in the country's economy is increasing and the overall financial and credit conditions are favorable for a strong economic recovery. The report also notes that the quality of expenditure by the government has been improving in the last six months of the current financial year.

With decades of low interest rates, declining inflation and a good position on the current account front, the country's economy is poised to recover from the losses caused by the corona and regain its place among the fastest growing countries in the world.

Overall demand indicators are showing a shorter short-term outlook than before. Mobility is improving rapidly and the job market has strengthened, the report said. Many countries around the world today are facing supply disruptions, high inflation and new cases of corona.