Nifty 500 P/E at 21.9: cheaper since August, same gap

The reading

The Nifty 500 closed at 22,202.85 on Tuesday, 6 October 2026, at a price-to-earnings ratio of 21.90. Its price-to-book ratio was 3.11 and its dividend yield 1.02%. The Nifty 50 closed at 22,776.10, at a P/E of 19.49, a P/B of 2.80 and a yield of 1.21%.

This updates our August post on the Nifty 500, which looked at the reading of 26 August. The daily series are on the Nifty 500 and Nifty Total Market valuation pages.

Six weeks on

The comparisons start on 31 March 2021, when NSE moved its index P/Es to consolidated earnings.

The index fell 5.8% in six weeks, and the Nifty 50 5.9%. The P/E moved from about the 29th percentile of its record to about the 13th. Its median since 2021 is 23.94; the low of 19.40 came on 20 June 2022 and the high of 36.56 on 8 April 2021.

What did not change is the gap with the Nifty 50. The two fell together, so the broad index still trades at 1.12 times the large-cap P/E. Against a median of 1.07 since 2021, that gap is wider than on 1,160 of 1,363 sessions, about 85%, much as it was in August.

New lows for P/B

In August the Nifty 500's P/B of 3.29 had only six lower sessions, with the low of 3.21 on 23 March 2026. That low has since been broken. On 6 October the P/B was 3.11, and only 5 sessions since 2021 were lower, all between 28 September and 5 October 2026, with the low of 3.06 on 29 September and 1 October. The median is 3.98.

Book has grown faster than price. Dividing the index by its P/B gives a book figure of about 7,139 per index unit, 11.2% more than a year ago and 24.1% more than on 1 October 2024. Over the same two years the index fell 8.5% and the earnings figure, from the P/E, rose 16.5%.

The yield has moved up with the falling price, from 0.95% to 1.02%. It is still below its 1.15% median, and 1,249 of 1,363 sessions yielded more.

A step on 30 September

On 30 September the P/E rose from 21.42 to 21.77 while the index slipped 0.13%. Dividing the index by its P/E, the earnings figure behind it fell 1.74% that day, and the Nifty 50's fell 1.24% on the same day.

A step that hits both indices on one date comes from the data, not from trading: a change in the index's members, or an update to the earnings NSE uses. The published numbers do not say which. That step is why the earnings figure is now 1.5% lower than on 26 August, after rising for most of the year.

The year so far

The broad market is still well ahead of the Nifty 50 in 2026, but all of that lead was built before August. Since 26 August the Nifty 500 and the Nifty 50 have fallen almost exactly as far, 5.8% and 5.9%, and the Total Market 5.5%.

Within the broad index the size bands moved differently. From 26 August to 6 October the Nifty 100's P/E went from 20.32 to 19.26 and the Midcap 150's from 30.00 to 28.54, while the Smallcap 250's rose from 34.02 to 34.66.

Neither broad index is near its record. The Nifty 500's highest close, 24,496.90, came on 26 September 2024, and it is 9.4% below it.

What this does not tell you

A cheaper P/E is not a forecast. Our look at whether Nifty P/E predicts returns shows how loose the link is.

An index P/E is a weighted average of very different companies. The Nifty 500's 21.90 blends large caps near 19 with small caps near 35, and the blend shifts as prices move.

The ratios step when data updates. Earnings arrive quarterly and book mostly once a year, and the 30 September step shows that a P/E can move on a day the price barely does.

It is not your fund. A flexi-cap or multi-cap fund chooses its own mix of large, mid and small companies.

Where to go from here

For the large-cap index, see the Nifty 50 P/E post for October, and for the size bands, the October posts on the Midcap 150 and the Smallcap 250.

Funds that spread across the whole market are in the flexi cap fund rankings. The guide to flexi-cap vs multi-cap funds explains how each splits its money by company size, and is the market expensive? puts index valuations in context.