The Indian benchmarks have fallen over 40 percent from its January peak due to the coronavirus-led rout. As per global brokerage firm CLSA, the valuations have become attractive with two-third Nifty stocks trading below 10-year average multiples, however, it pointed out that the sentiment indicators have yet to signal a bottom.

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CLSA has noted that this may be only the fifth instance of a 40 percent-plus decline in Nifty in the last 30 years. The final bottom in the four previous falls took 10-27 months versus less than three months in the ongoing fall, it said.

"While the indicators on selling intensity and price momentum have signaled a bottom, volatility and some breadth indicators have not yet confirmed this. As confirmed by record FPI outflows, this bear market may have hit the point of capitulation in March 2020, but this is likely to be followed by a period of apathy and lower volatility where we reach a point of investor dismay on equity investment. Such conditions have typically marked final bottoms, which may not have occurred yet," the brokerage stated in its report.

The brokerage firm also said, in an earlier report, that the stocks have become as cheap as they were during the 2008 global financial crisis (GFC) when compared on a P/B (price-to-book) metric. While the Nifty hit the same level as the GFC-low on trailing P/B, it is still at a premium on trailing P/E (price-to-earnings), CLSA noted.

Using Bloomberg consensus data for 12-month forward multiples, the brokerage found 88 percent of Nifty stocks are trading below their respective 10-year average multiples. 65 percent of stocks are 1 standard deviation below their 10-year average multiples and almost 96 percent of Nifty stocks are trading below five-year average multiples.

Only a few consumer names are trading above their historical average benchmark valuation and bottom-up individual stock valuations have become quite attractive, CLSA report mentioned.

CLSA believes that the demand destruction caused by COVID-19 will be

greater than GFC in 2008. It said that as in 2008, this may have made investors wary of consensus estimates, which is why the 2008 bottom was sub-8 times forward P/E.