During the fourth quarter of 2017, Indian equity markets traded
near record highs, driven by major economic and political factors,
including the Gujarat and Himachal Pradesh elections and recent
“big bang” reform announcements. The growth of median
multiples across many industries in India from September 30, 2017
to December 31, 2017 is a further reflection of the market’s
buoyancy.
An increase in equity markets volatility was observed following
the union budget announcement on February 1, 2018. Traders and
investors remained skeptical about the imposition of long-term
capital gains tax on the sale of equities and equity mutual fund
units. On the positive side, the corporate tax rate for companies
with turnover of less than INR 250 crores was reduced from 30
percent to 25 percent. The following sectors have realized the
greatest expansion and contraction in P/E multiples over the last
quarter:
