Which Nifty Sectors Are Overvalued or Undervalued Right Now? (June 2026)

Which Nifty sectors are overvalued or undervalued right now?

As of June 2026, among the large, widely-followed sectors, Nifty IT screens the cheapest relative to its own history, trading at a PE of 18.27, about 33% below its 7-year median of 27.12. At the other end, Nifty Pharma is the most expensive relative to its own history, at a PE of 38.19, roughly 15% above its 7-year median. The broad market sits in between and slightly cheap: the Nifty 50 is at a PE of 20.55 versus a 7-year median of 22.59. (A few thinner sectors such as Nifty Media show even larger discounts to their medians, but those medians are distorted by years of near-zero earnings, so they are not a clean signal; more on that below.)

Here is how the major indices stack up against their own 7-year median PE, which is a cleaner gauge of "cheap or expensive" than the raw number, since every sector has a different normal range.

The scorecard at a glance

Index	Current PE	7-Year Median PE	vs Median	Read
Nifty IT	18.27	27.12	-33%	Cheapest vs its own history
Nifty FMCG	33.76	41.76	-19%	High-multiple sector, cooled
Nifty Bank	14.38	17.36	-17%	Cheapest by absolute PE
Nifty 50	20.55	22.59	-9%	Fairly valued
Nifty 500	22.71	24.58	-8%	Fairly valued
Nifty Midcap 150	29.25	31.02	-6%	Near fair value
Nifty Smallcap 100	31.82	29.95	+6%	Above its own history
Nifty Pharma	38.19	33.10	+15%	Most stretched sector

The broad market

The Nifty 50 PE is 20.55, about 9% below its 7-year median of 22.59. The Nifty 500, which covers most of the listed market, is at 22.71 versus a median of 24.58, roughly 8% below. On this measure the overall Indian market is fairly valued, modestly cheaper than its recent norm rather than stretched.

The cheap end

Nifty IT stands out at 18.27, around 33% under its 7-year median of 27.12, the steepest discount to its own history of any major index. It now even trades at a lower PE than the Nifty 50, which is striking given IT spent most of the past seven years at a premium. That cross-comparison is a curiosity rather than proof of value, though: IT and the broad index carry different growth expectations and earnings profiles, so the meaningful signal is IT versus its own past, not IT versus the Nifty 50. The derating has a clear story behind it. The market is pricing in fears that AI could disrupt the traditional services model, alongside slower growth and cautious deal commentary, so the lower multiple may reflect genuinely lower expected growth rather than a simple bargain. Nifty Bank is the lowest major sector in absolute terms at 14.38, about 17% below its median of 17.36, partly because banks structurally trade at low earnings multiples. Nifty FMCG, at 33.76, is about 19% below its 7-year median of 41.76, a high-multiple sector that has cooled considerably.

The expensive end

Nifty Pharma is the clearest outlier on the rich side at 38.19, about 15% above its 7-year median. Among the size baskets, the Nifty Smallcap 100 is the only broad index trading above its own history, at 31.82 versus a median of 29.95, roughly 6% above. Midcaps (29.25 vs 31.02) are close to their median.

The one-line read: large-cap India and most sectors are sitting at or below their typical valuations, IT is unusually cheap versus its own past, and the only real pockets of premium are smallcaps and pharma.

A note on method

"Overvalued" and "undervalued" here mean relative to each index's own 7-year median PE, not an absolute judgment. A PE of 14 for banks and 34 for FMCG can both be normal for those sectors. That is why this piece compares each index only to its own history, and avoids reading anything into one index's PE level being higher or lower than another's. Different sectors carry different growth expectations, earnings cyclicality and capital structures (banks, for instance, are usually better judged on price-to-book), so comparing raw PE levels across them is not apples to apples. One more caveat: when a sector's earnings have been near zero or very volatile, its historical median PE balloons (Nifty Media's 7-year median sits near 95), which makes the "percent below median" look enormous even when it tells you little. Treat those cases with care rather than as the deepest bargains. This comparison also only includes indices with a full seven-year price history, so newer baskets such as the Nifty Microcap 250 are left out: with only about five years of data, their "seven-year median" is not a true seven-year figure. All figures are trailing PE from NSE data.

FAQ

Q: Which Indian sector is most undervalued right now?

Among the large, widely-followed sectors, Nifty IT is the cheapest relative to its own history as of June 2026, trading at a PE of 18.27, about 33% below its 7-year median of 27.12. Some thinner sectors show larger percentage discounts, but their historical medians are distorted by past periods of near-zero earnings, so they are less reliable signals.

Q: Is the Indian stock market overvalued in June 2026?

No. The Nifty 50 is at a PE of 20.55, about 9% below its 7-year median of 22.59, and the Nifty 500 is about 8% below its median. The broad market is fairly valued, slightly cheaper than its recent norm.

Q: Which Nifty sector is the most expensive?

Nifty Pharma, at a PE of 38.19, about 15% above its 7-year median of 33.10. Among size baskets, the Nifty Smallcap 100 is the only broad index trading above its own median.

Q: Why compare a sector's PE to its own median instead of the market PE?

Because different sectors have different normal multiples. Banks usually trade cheap and FMCG usually trades rich. Comparing each index to its own 7-year median shows whether it is expensive or cheap for itself.

---

Source: Data from NSE, updated daily at indexpe.in