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    Earnings yield hints at further gains for midcaps

    Analysts say when earnings yield is higher than the bond yield, there is usually more money flow into equities.

    Synopsis

    Earnings yield is earnings per share (EPS) for the most recent 12-month period divided by the current market price. It is the inverse of the price earnings (PE) ratio.

    Mumbai: Mid- and small-cap stocks may be poised for a rally if their current earnings yield — a measure of a stock’s expected returns — is to go by. An analysis showed the trailing earnings yield of 200 stocks of the NSE-500 index is more than 5%.“In the past, we have seen that earnings yield looks higher at the early recovery phase. In 2013, when earnings yield was above 4%, we have seen a big rally in mid-caps and small-caps during 2013-2017,”
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    The Economic Times