Nifty logs best week in 3 months, valuations hit multi-year lows: Bear case scenarios point to THESE year-end levels

Equity benchmark indices Sensex and Nifty surrendered early gains to close almost flat in a volatile trade on Friday as uncertainties over the global trade war sapped investors’ risk appetite. Benchmark index Nifty 50 logged its best week in three months, led by heavyweight Reliance Industries and metal stocks, as losses in the past three weeks triggered bargain buying.

On the day, the Nifty 50 rose 0.03% to 22,622.5, while the BSE Sensex ended 0.01% lower at 74,332.58.

The Nifty rose about 1.9% this week, its best in three months, while the Sensex gained 1.6% and logged its highest weekly gains since January-end.

Besides, a bearish trend in global markets and persistent foreign fund outflows also hit investor sentiments, traders said.

Snapping its two-day winning streak, the 30-share BSE Sensex slipped 7.51 points to end at 74,332.58. During the mid-session, it climbed 246.34 points or 0.33 per cent to hit an intraday high of 74,586.43.

However, the broader Nifty of NSE edged up 7.80 points to close at 22,552.50. During the day, the 50-share barometer rose 89 points or 0.39 per cent to hit a high of 22,633.80.

During the week, the BSE Sensex climbed 1,134.48 points or 1.55 per cent high, and the NSE Nifty rose 427.8 points or 1.93 per cent.

According to latest report by Ventura, Amid the ongoing stock market correction, Nifty’s forward P/E valuations for CY25 and CY26 have declined to multi-year lows of 18.5X and 16.2X, respectively. 

Historically, during major market meltdowns — such as the Global Financial Crisis (GFC) of 2008 and the Covid-led crash in March 2020—Nifty’s forward P/E dropped to 10.5X and 15X, respectively. In 2020, despite Covid being more melodramatic than the GFC, the fall was not as deep as the world was more aware of what quantitative easing (QE) was, and its effect, than in 2008.

Nifty Index: Bear Case Scenarios for 2025

If valuations during previous corrections are used as reference points, Nifty could decline to

20,510 (based on CY25 consensus EPS of INR 1,194 and 15X forward P/E seen during the 2020 Covid crash) or

extreme stress-case valuation of 14,357 (if it mirrors the 10.5X forward P/E from the 2008 GFC)

however, the median of the two, 17,434 (12.75X P/E), is the more likely deeper correction.

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