P/E

Today's chart of the day shows a comparison of the P/E of select BSE indices as these stand today compared to what they were a year ago. And the contrast is stark. While P/E of all these indices were at their lows on October 2008 for obvious reasons (we were at the peak of fear of a global recession and credit crisis), the way these have moved up over the last few months draws much concern..

Note: CG-Capital goods, HC-Healthcare, O&G-Oil & Gas
Data Source: CMIE Prowess
Proponents of a bull run are all making the case of a much improved corporate performance in the September quarter. But this seems a bit farfetched. The earnings outlook is far from rosy. While June quarter performance was driven by operational leverage in the form lower raw material and interest cost, we do not see this sustaining going forward.

Ultimately companies have to grow sales to grow their profits, which seems tougher to achieve in the current environment, at least if we are to go by our recent interactions with companies across sectors.