Neutral impactEconomy
Nifty's PEG ratio near 10-year low but why don't stocks look cheap yet? Valuation paradox explained
The Economic Times 47 min ago·26 Oct 2026, 3:49 am
The price‑to‑earnings‑growth (PEG) ratio for the Nifty index has slipped to its lowest level in about a decade. A lower PEG suggests that, relative to the earnings growth the market expects, stocks are priced more cheaply than they have been in recent years.
Despite that, many investors still feel the market is not cheap. The drop in the PEG is largely driven by slower projected earnings growth and higher real interest rates, which keep valuations anchored. In addition, lingering concerns about global inflation, monetary‑policy tightening and corporate earnings quality temper enthusiasm. Traders will be watching upcoming earnings releases, RBI policy cues and macro data such as GDP and PMI numbers to see if the gap between the low PEG and perceived valuation narrows.
Key takeaways
- Category: Economy.
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