Nifty P/E of ~20.8 is calculated using index level divided by index EPS, where both are computed from the free-float market-cap weighted earnings of all Nifty 50 companies, as per NSE’s methodology.

Step-by-step logic (Nifty 50 P/E):

1. Take all Nifty 50 companies

- Use only the free-float market cap of each stock (i.e., exclude promoter/locked-in holdings).

- Use each company’s standalone trailing 12‑month EPS as accepted by NSE (not your broker’s EPS figure).

2. Calculate index EPS (Nifty EPS):

Conceptually:

- First, compute each company’s earnings = (EPS × number of free‑float shares).

- Sum these earnings for all 50 companies → Total free-float earnings of Nifty 50.

- Compute Total free-float market cap of Nifty 50 (sum of free-float market caps of all 50 stocks).

- Nifty EPS is derived so that:

\[

\text{Nifty P/E} = \frac{\text{Nifty Index Level}}{\text{Nifty EPS}}

\]

NSE does this calculation using its own internal formula, but the end result is an official Nifty EPS value published on the NSE website along with P/E.

3. Compute Nifty P/E:

\[

\text{Nifty P/E} = \frac{\text{Nifty Index Level}}{\text{Nifty EPS (trailing 12‑month, free-float weighted)}}

\]

4. How “~20.8” is obtained in practice:

- Suppose on a given date,

- Nifty 50 index level = 24,960 (example),

- NSE-reported Nifty EPS (TTM) = 1,200 (example).

- Then:

\[

\text{P/E} = \frac{24,960}{1,200} \approx 20.8

\]

The 20.8 value you see on NSE/broker portals is exactly this ratio, using NSE’s published Nifty EPS, not something you compute directly from individual stocks unless you replicate NSE’s free-float methodology and earnings series.

5. Important clarifications:

- It is a trailing P/E (based on last 4 quarters’ earnings), not forward.

- It is based on standalone earnings as per NSE’s convention (not consolidated, unless NSE explicitly changes methodology).

- Because it is free-float weighted, P/E is not a simple average of 50 stock P/Es.

6. Where to see the exact Nifty P/E of 20.8:

- Go to the official NSE India website → Market Data → Indices → Nifty 50 → “Historical / Valuation” section, where P/E, P/B & Dividend Yield for Nifty are published day-wise.

If you want, I can outline how to approximate this yourself from a stock list and EPS data in Excel, but do note it will only match NSE approximately unless you use the same free-float and EPS definitions as NSE.

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