PE De-Rating / Re-Rating (1/n) : After delivering 50%+ return from April 23 to September 24, the Indian equity markets have witnessed price and time correction since then, and have been consolidating in a tight range since March-25. PSU Banks and Financial Services delivered double digit returns followed buy mid-single digit returns by metals and Private Banks. Rest all sectors delivered negative returns and witness PE-De-Rating.

This is another phase of market consolidation after superb returns like October 21 to March 23.

Individual price actions and portfolio returns depend on stock specific returns driven by their company specific catalysts.

Chart showing PE De-Rating, EPS Growth and Deviation from median PE since these broader indices peaked around September 24. (2/n) GDP growth is driven by four main components: consumption, business investment, government spending, and net exports. Other key factors include increases in productivity, technological advancement, a skilled labor force, and a stable political and economic environment.

Primary components of GDP

1. Consumption: Spending by households on goods and services, which can be boosted by tax cuts and rebates.

2. Business investment: Companies purchasing capital goods like machinery, equipment, and technology to produce goods and services more efficiently.

3. Government spending: Public expenditure on goods, services, and infrastructure projects.

4. Net exports: The total value of a country's exports minus the total value of its imports.

Other contributing factors

1. Productivity: An increase in the output per unit of labor or capital, which leads to greater economic efficiency.

2. Technological progress: The adoption of new technologies can lead to innovations that improve production methods and create new products and services.

3. Human capital: A more educated and skilled workforce is more productive and drives economic growth.

4. Natural resources: A country's access to natural resources can be a driver of economic activity.

5. Political stability and governance: A stable environment with effective policies and good governance encourages both domestic and foreign investment.

6. Entrepreneurship: A dynamic private sector with strong entrepreneurial activity is vital for job creation and innovation.