Investors’ expectation of corporate profits dipped to record lows in 2008, but was still the best among other emerging markets, the Economic Survey on Thursday said.

“The price-to-earnings ratio which partly discounts future corporate earnings reflecting investors’ expectations of corporate profit, declined in all market segments reflecting the downward trend in stock prices,” according to the Economic Survey tabled in Parliament on Thursday.

There was a sharp correction in valuation of Indian stocks. The year-end valuation of stocks in terms of P/E ratio of Indian indices at the end 2008 stood at 12.4 to 12.9.

“Notwithstanding the sharp correction in the valuation of Indian stocks in terms of P/E ratio of Indian indices, it (the P/E ratio) was the highest among select emerging market economies such as South Korea, Thailand, Malaysia and Taiwan,” the survey noted.

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