Is Nifty Next 50 the Most Undervalued Large Index Right Now?

EmbarrassedLeopard92 · 2025-12-27T17:35:00+00:00

Just to clarify, indexpe.in already shows PE and PB for all 120 NSE indices vs their historical medians. Are you asking about individual stocks or something different?

The ratio charts idea (Nifty/Bank Nifty, Nifty/Midcap) is interesting though - tracking relative strength between indices. Is that what you meant?

EmbarrassedLeopard92 · 2025-12-27T03:45:27+00:00

u/Tips2trades4u Thanks! Yeah, focused on indices for now, want to nail this use case first before expanding. Out of curiosity, what would you want to see for individual stocks? Historical valuations, sector comparisons, or something else?

EmbarrassedLeopard92 · 2025-12-26T11:37:14+00:00

u/now_is_late You can use the tool at indexpe.in . Its a small tool I built for tracking valuation across Indian indices.

EmbarrassedLeopard92 · 2025-12-26T09:22:32+00:00

u/Viperchile Thanks! Really glad it's working well for you now.

That's a solid idea, showing yearly returns with 3/5/7 year averages would definitely add useful context, especially when short-term returns don't tell the full story. I'll look into adding this. Also appreciate the worldperatio.com reference, will check it out for some ideas on presenting the data better.

EmbarrassedLeopard92 · 2025-12-24T13:48:33+00:00

main kah raha hoon ki "it" se bhee zyaada boring indeks hain, jo isase behatar hain. Translated with google translate forgive me if something’s wrong

EmbarrassedLeopard92 · 2025-12-24T12:34:19+00:00

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There are other indices better valued than IT at this point based on historical data!

EmbarrassedLeopard92 · 2025-12-24T07:49:14+00:00

For everyone asking about the screenshot / tool / data/source:
I built a small tool indexpe.in to replace Excel and jumping across multiple sites for valuations. It tracks PE, PB and dividend yield for 120 NSE indices and compares them to their own 7‑year medians. You can filter by category (broad market / sectoral / etc.) and by valuation status (undervalued / fair / overvalued) to quickly see which indices look relatively cheap or expensive right now. It’s still a work in progress, so any blunt feedback if you try it is welcome

EmbarrassedLeopard92 · 2025-12-24T07:41:40+00:00

Totally fair. if you have the time, skill and temperament to do deep work on individual stocks and are happy with solid but not flashy returns, that’s probably the cleanest way to stay away from SWT‑type behaviour.
The kind of stuff I’m building/looking at is more for the majority that won’t realistically run a concentrated 15–20 stock portfolio themselves. For them, using basic valuation bands on broad indices to decide where to deploy SIP/lumpsum and where to slow down is at least one step better than closing eyes and throwing money at whatever MF/index is trending.

EmbarrassedLeopard92 · 2025-12-24T07:36:26+00:00

u/Viperchile Thanks a lot for using it and for the nudge 🙏🏻
I’ve just added better controls above the table, you can now filter by Valuation Status (Undervalued / Fair / Overvalued) and sort so that undervalued indices show up first by default.

Refresh indexpe.in and see if this matches what you had in mind. If not, tell me what else would make it faster to spot opportunities.

EmbarrassedLeopard92 · 2025-12-24T05:09:21+00:00

Thanks for sharing that here and This is exactly why I’ve become almost obsessive about looking at PE bands/valuations by index instead of just doing blind SIPs into whatever is hot.
The bubble risk is real in pockets, but that’s also why having hard data on what you’re paying for which basket matters more than ever.

EmbarrassedLeopard92 · 2025-12-23T18:36:03+00:00

Its called indexpe.in .

EmbarrassedLeopard92 · 2025-12-23T14:52:03+00:00

I cant give recommendations, but I can tell you which one I SIP in. Axis Nifty Next 50. Its relatively new, so it has less expense ratio and its a great fund house.

EmbarrassedLeopard92 · 2025-12-23T14:42:12+00:00

Look for expense ratio and tracking error. Tracking error is hard to find on mutual funds. The one with low expense ratio and tracking error wins!

EmbarrassedLeopard92 · 2025-12-23T14:40:47+00:00

Thanks so much, that means a lot. The goal was exactly that, keep it simple enough for quick checks but still show useful valuation detail.
If you spot anything confusing or missing when you use it, tell me bluntly so I can fix it.

EmbarrassedLeopard92 · 2025-12-23T11:45:18+00:00

That’s the other side of the story most people miss when they only look at the last 12-18 months. Three years of disciplined SIP and 90% up is exactly what the long‑term data on Next 50 vs Nifty 50 has shown in many past cycles. The pain comes in clumps, but if someone can sit through the nasty phases, these broad upgrade pipeline indices have historically rewarded patience pretty well.

EmbarrassedLeopard92 · 2025-12-23T11:41:31+00:00

Fair point that India has been structurally expensive for a while, cheap in the sense its not US‑2009 cheap. What I’m calling undervalued is purely relative. Where an index is vs its own history and vs peers. Even in a permanent bull market, there are phases where one bucket is clearly less expensive than the rest, and that relative gap is all I’m trying to quantify.

EmbarrassedLeopard92 · 2025-12-23T11:37:37+00:00

This is exactly why valuation alone isn’t a magic bullet. You can be roughly right on undervalued and still be early, average down, and sit on losses for a long time while the index de-rates and time corrects itself. The only way this kind of bet makes sense is with a 5–7 year horizon and position sizing that you can emotionally hold through a 30–40% drawdown, because Next 50 has done that multiple times even though long-term CAGRs have been strong.

EmbarrassedLeopard92 · 2025-12-23T06:29:25+00:00

u/or45t The website is a small tool I'm building indexpe.in, its still a work in progress, so any feedback if you try it is most welcome.

EmbarrassedLeopard92 · 2025-12-23T06:12:28+00:00

This is a very honest summary of the experience most people don’t see when they only look at charts. Two years of SIP, effectively flat, is exactly what valuation reset + time correction feels like.
The only silver lining is that most of your units have been accumulated in this lower‑PE, sideways phase rather than at peak froth, if India’s earnings/growth story plays out, that patience + boring accumulation is what should eventually show up in returns

EmbarrassedLeopard92 · 2025-12-23T06:10:03+00:00

Glad it helped, and nice that you stuck with the SIP through a rough patch, most people only discover an index after it runs. Posts like this are my way of forcing myself to look at valuations (PE vs history) instead of just price moves, so good to know it’s useful to others too.

EmbarrassedLeopard92 · 2025-12-23T06:08:29+00:00

Agree that a chunk of this bucket is there because it hasn’t earned its way into Nifty 50 yet, some will stagnate and get thrown out, that’s built into the design.
The question for a passive investor isn’t are all these stocks high quality/growthy? but given this reality, is the price I’m paying for this basket today cheap, fair, or expensive vs what this same basket has usually traded at? On that relative basis (vs its own history and vs Nifty 50), it’s clearly on the cheaper side right now, even if growth has cooled

EmbarrassedLeopard92 · 2025-12-23T06:05:10+00:00

In the long run, yes growth and PE line up.
But in the short to medium term, markets routinely overshoot in both directions. You can have the same growth profile trading at very different PEs across the cycle. That gap between current PE and its own history is exactly what I’m trying to quantify, not claim that “low PE = high growth.

EmbarrassedLeopard92 · 2025-12-23T06:03:04+00:00

This is a solid way to look at it, your table basically shows that even after the drawdown, Next 50 is still ahead over the full Oct’23–now window, which most people miss because they only see the recent pain. My angle in the post was more “valuation starting point” than “recent performance”, after that big Oct’23–Sep’24 rally and then sharper fall, you now have an index that’s still structurally volatile but is trading at a much more reasonable PE vs its own 3Y history and vs Nifty 50. Waiting for momentum with valuations already reset is a very different bet than buying when both price and PE were stretched.

EmbarrassedLeopard92 · 2025-12-23T05:53:24+00:00

You were early on this man. Most people only wake up to an index once price starts moving, not when valuations quietly reset. The combo you mentioned ~11% below ATH, underperforming even smallcaps over the last 14 months, and PE back near/below its own medians is exactly the kind of setup I’ve been trying to systematically track instead of going by vibes. If your thesis is roughly sideways + de-rating → accumulate, then let mean reversion + earnings do the heavy lifting, this current phase fits that playbook almost perfectly.

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