Indian equity markets remain among the most expensive globally despite recent corrections, according to a report by Nuvama Institutional Equities. The brokerage highlighted that India’s 12-month forward price-to-earnings (PE) ratio stands at 23.3 –the highest among major developed and emerging markets –and is 1.6 standard deviations above its 10-year average.The country’s 12-month forward price-to-book (PB) ratio is also elevated at 3.4, which is 1.3 standard deviations above the long-term average. These indicators suggest Indian stocks are significantly overvalued on both earnings and book value metrics, ANI reported.In comparison, the United States follows with a PE of 22.4 and PB of 4.7. While both India and the US share the same PE deviation from their 10-year averages, the US PB deviation is higher at 1.9.Among other emerging markets, Taiwan (PE 16.1, PB 2.7), Philippines (PE 10.6, PB 1.6), and Indonesia (PE 11.2, PB 1.0) are trading at substantially lower valuation multiples. The broader emerging market (EM) index reflects a forward PE of 12.8 and PB of 1.7 — underscoring India’s premium valuation.Despite these high valuations, India’s fundamentals remain robust. The return on equity (ROE) for FY25 is projected at 15.6%, marginally lower than the US forecast of 17.1%. For FY26, ROE is expected to be 14.5% for India versus 18.8% for the US. The average ROE for emerging markets stands at 11.7% for FY25 and 14.4% for FY26.However, India’s dividend yield remains among the lowest globally, estimated at 1.2% for FY25 and 1.4% for FY26. This may limit its appeal for income–seeking investors.Nuvama noted that Indian equities have been under pressure for the last 10 months, with the benchmark indices retreating from their peak in September 2024. Despite the correction, valuations remain elevated and could constrain further upside, especially amid global market volatility or domestic policy shifts.