Abstract
Equity markets in India have seen a metamorphic change in the past two decades exposing the markets and its participants to various kinds of risks and valuations. Valuation is the process of assigning a rupee value to a specific share. It states the true or intrinsic value of an asset. An ideal valuation technique would assign an accurate value to all shares. In general valuation is a complex topic, no single valuation model can truly predict the intrinsic value of a share and no valuation model can predict with certainty how the price of a share will vary in future. There are different types of valuation models like balance sheet valuation which is based on accounting information like book value, liquidation value, replacement cost, discounted cash flow techniques like dividend discount model, free cash flow model and relative valuation techniques like price earnings ratio, price to book value ratio, price – sales ratio. However valuation models provide a basis to compare the relative merits of two different shares. Among all these market value is most watched by investment and fund managers.Valuation in this study refers to equity market value. Equity valuation is a central question which the fund managers, investment advisors, and stock brokers in the field of Capital markets are trying to address through different angles with various clues. As most of the fund managers, individual investors and investment advisors in the process of valuation facing challenges in determining the right avenue for investment. In this regard they try to analyze the fundamental factors which are related to economy such as GDP growth, inflation related factors majorly, and then start analyzing industry related factors, to choose a specific company for investment, and there starts a need, for investment managers to collect the company specific information (accounting variables) relating to companies for assessment of equity valuation. In this background they undertake a number of valuation tools that can facilitate them in assessing the right potential and information about the price of securities that the trader will be waiting for taking various investment decisions