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Navigating Crests & Troughs

Dec’25 Sectoral PE trend

In December 2025, most sectors traded at valuations above or near their long-term averages, reflecting strong market sentiment. The Auto, Capital Goods, Chemicals, Healthcare, and IT sectors had forward PE ratios slightly higher than their long-term averages, while the Electricals sector showed the sharpest premium over its average. Consumer Durables and FMCG remained close to their respective averages, with FMCG slightly below. Construction Materials and Logistics stayed mostly in line with long-term trends. Overall, market valuations remained high, with Electricals and Consumer Durables standing out for their richer valuations.

* Automobile & ancillaries market capitalization (Mcap) remained stable in Dec’25, ranging between Rs 23,850 billion and Rs 24,190 billion. The sector’s PE ratio hovered around 31 for most of the month, rising slightly to 32 by year end. Compared to the long-term average PE of 26, the current valuation is above average but still within the historical band of 16–37, with ±1 standard deviation levels at 21 and 30.

*  Capital goods maintained a stable Mcap in Dec’25, fluctuating between Rs 12,470 billion and Rs 12,650 billion. The 1-year forward PE ratio remained elevated at 33–34 throughout the month, significantly above the long-term average of 26. The historical PE band ranges from 15 to 49, with ±1 standard deviation levels at 17 and 34, indicating that the current valuation is at the upper end of its standard deviation range.

*  Chemicals Mcap in Dec’25 ranged between Rs 12,070 billion and Rs 12,290 billion, showing slight fluctuations. The 1-year forward PE ratio remained high at 35–36 throughout the month, above the long-term average of 33. The historical PE band spans from 21 to 50, with ±1 standard deviation levels at 25 and 41, indicating that current valuations are near the upper end of the standard deviation range.

*  Construction materials Mcap in Dec’25 ranged between Rs 7,830 billion and Rs 8,030 billion, showing minor fluctuations. The 1-year forward PE ratio remained constant at 30 throughout the month, exactly matching the long-term average of 30. The historical PE band spans from 15 to 44, with ±1 standard deviation levels at 24 and 36, indicating that current valuations are at the midpoint of the historical range.

*  Consumer durables Mcap declined slightly during Dec’25, from Rs 2,390 billion on 5-Dec to Rs 2,290 billion on 31-Dec. The 1-year forward PE ratio eased from 46 at the start of the month to 43 by year-end but remained above the long-term average of 45. The historical PE band spans from 16 to 81, with ±1 standard deviation levels at 29 and 60, indicating that current valuations are near the long-term average but below the upper deviation threshold.

*   Electricals Mcap increased slightly during Dec’25, from Rs 2,340 billion on 5-Dec to Rs 2,390 billion on 31-Dec. The 1-year forward PE ratio fluctuated between 34 and 35, which is significantly above the long-term average of 17. The historical PE band spans from 1 to 51, with ±1 standard deviation levels at 3 and 30, indicating that current valuations are well above the upper deviation threshold.

*  FMCG Mcap in Dec’25 ranged between Rs 19,940 billion and Rs 20,350 billion, showing slight fluctuations. The 1-year forward PE ratio remained steady at 37 throughout the month, slightly below the long-term average of 39. The historical PE band spans from 30 to 51, with ±1 standard deviation levels at 35 and 43, indicating that current valuations are near the lower end of the standard deviation range but within historical norms.

*  Healthcare Mcap declined slightly during Dec’25, from Rs 23,980 billion on 5-Dec to Rs 23,570 billion on 31-Dec. The 1-year forward PE ratio eased from 33 at the start of the month to 32 by year-end, remaining above the long-term average of 28. The historical PE band spans from 16 to 38, with ±1 standard deviation levels at 23 and 33, indicating that current valuations are near the upper end of the standard deviation range.

*  IT Mcap in Dec’25 ranged between Rs 36,380 billion and Rs 37,090 billion, showing minor fluctuations. The 1-year forward PE ratio remained at 25 for most of the month, easing slightly to 24 by year-end. This is above the long-term average of 22 but well within the historical PE band of 14 to 35. The ±1 standard deviation levels are 17 and 27, placing current valuations near the upper end of the standard deviation range.

*   Logistics Mcap increased during Dec’25, from Rs 4,640 billion on 5-Dec to Rs 4,810 billion on 31-Dec. The 1-year forward PE ratio remained at 25 for most of the month, rising slightly to 26 by year-end, aligning with the long-term average of 26. The historical PE band spans from 13 to 39, with ±1 standard deviation levels at 21 and 32, indicating that current valuations are near the midpoint of the historical range.?

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