What Is a P/E Ratio, and Why It's Never the Whole Story
The price-to-earnings ratio is the most quoted valuation number in Indian markets. Here is how it is calculated, what it actually measures, and the traps that make a 'cheap' P/E misleading.
Clear explainers on the terms and mechanics behind investing, from P/E ratios to compound growth.
Start here if you are new to markets. These explainers cover how the NSE and BSE work, what a demat account does, how a trade settles, how indices like the NIFTY 50 and SENSEX are built, and how to read common numbers such as the P/E ratio and dividend yield.
Each article sticks to how things work and cites the exchange, SEBI or RBI source behind it, so you can check the detail yourself. Terms you don't recognise are defined in the glossary, and the calculators let you see what compounding, SIPs and inflation do to real rupee amounts.
The price-to-earnings ratio is the most quoted valuation number in Indian markets. Here is how it is calculated, what it actually measures, and the traps that make a 'cheap' P/E misleading.
Both pool investors' money into a basket of securities. The real differences are in how you buy and sell them, what they cost, and the small frictions — like spreads and tracking error — that show up in your returns.
Dividend yield looks like a simple measure of income. Because it moves with the share price, a very high yield is often the market signalling doubt about whether the dividend will last.
Compounding is simple arithmetic with surprising results. Here is how it works in rupees, why starting early matters so much, and the three things — costs, inflation, and interruptions — that quietly eat into it.
A demat account holds your shares, a trading account places your orders, and a clearing corporation quietly makes sure both sides get what they were promised. Here is the full journey of a single trade in India.
When you buy a share in India, at least five institutions play a part. Here is who they are, what each one does, and why the system is designed with so many separate pieces.
NIFTY 50 and SENSEX are quoted every few seconds, but few people know how they are calculated. Here is how a number like 22,600 is built from the prices of a few dozen companies.
A systematic investment plan is simply a standing instruction to buy mutual fund units every month. Here is what happens to each instalment, why your average cost behaves the way it does, and what a SIP cannot do.
Applying for an IPO takes a few taps in a broker app, but behind it sits a structured process of disclosure, bidding, blocking funds, and allotment. Here is how each step works.
Why does a stock open at a price no one traded at the night before? What happens when a stock hits its upper circuit? Here is how the trading day on Indian exchanges is structured, and the safety valves built into it.
Global gold is quoted in US dollars per troy ounce; Indian gold is quoted in rupees per 10 grams. Converting one into the other explains most of the gap, and duties, taxes, and local demand explain the rest.