Investors' expectation of corporate profits dipped to record lows in 2008, but was still

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the best among other emerging markets, the Economic Survey today 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 today.

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.

At the end of 2008, the P/E ratio for South Korea's Kospi stood at 10.95, for Thailand's SET it was 7.26, for Indonesia (JCI) it was 8.26, Malaysia (KLCI) at 10.09, Taiwan (TWSE) at 9.31, while India's BSE Sensex had a P?E ratio of 12.36 and for NSE Nifty it was as much as 12.97.

Capital and commoditry markets of India experienced downturn during 2008 in the backdrop of heightened uncertainities triggered by the global financial crisis, slowdown in economic growth across the world, fluctuations in food, commodity, fuel prices and global financial markets, the Survey said.