Sensex vs Earnings: How Long Can the Gap Last? Since 2020, the Sensex has surged ahead of earnings, thanks to global liquidity and easy money. Now it could be time for time correction/ mean reversion. Look at the chart - it shows something important: earnings (EPS) growth and the Sensex are now converging. Why is this happening? 👉Valuation Compression: PE ratios are falling as markets adjust to realistic earnings expectations. 👉Liquidity Matters: FII & DII flows will decide if the rally sustains. 👉Interest Rates: Any RBI rate cuts can boost valuations. It needs to address flat yield curve. What’s Next? ✅ If earnings pick up, the Sensex can hold current levels. ✅ If earnings stay slow, expect a correction or sideways market. 👉 Bottom line: The market can’t stay ahead of fundamentals (eps)forever without any fall in price of money. #stockmarket #investing #sensex #epsgrowth #marketoutlook