When a sector gets discovered we see a sudden rush of money getting into that sector. The reason is that the earnings of the companies in that sector are likely to grow faster and it makes sense to pay more for a stock whose earnings grow at a faster rate. Now, how much more should be paid is the question. One of the ways is to determine by dividing a company’s PE multiple by its growth ratio. Look carefully at the PEG ratio which in the long-term indicates many things in a better manner than most other alternatives like PE which tend to create a mirage of value. By focusing on the PEG ratio, investors can better differentiate between genuinely valuable growth opportunities and those stocks that appear cheap but are cheap for a reason.
BSE Sensex closed in the green at 73,745.35, up by 1,245.05 points. The index touched a historical record of 73,819.21. Nifty50 also touched an all time high record and rose by 355.95 points to close at 22,338.75.