*Did You Know*
There is Big change coming up from NSE, i.e the way exchange calculates Index level P/E Ratio :
*NSE will now use “consolidated earnings” instead of standalone earnings to calculate Index Earnings.*
How NSE computes the Index Level P/E Ratio =
Adjusted total free float market capitalisation of all index constituents / Total rolling 4 quarters free float PAT of all index constituents.
(Source: Press release from NSE & above change is with effect from 31.03.2021)
Impact of the Change:
• Provides more realistic picture of total earnings
• Makes Index PE more representative
• Indicates Lower Market Valuations
In short, *Key Large Cap Indices likely to have Higher Earnings & “Show Lower PE Ratio”.*
By: via @AlliesFin Serve Stock Market
