Experts warn investors not to rely on just one ratio like the Price-to-Earnings (P/E) ratio to understand the stock market. Mukesh Dedhia, director at Ghalla & Bhansali Securities, says, "Valuations matter in the long run, but it need not have an impact in the short run. This is because there is never a right valuation for a stock, as it is a highly individual call." He explains that a stock with a high P/E ratio might still do well if investors expect strong earnings growth. Rajiv Thakkar, CEO of Parag Parikh Financial Advisory Services, also stresses that value investing needs more analysis. "There are many things you have to consider. For example, you have to find out whether the growth rate is sustainable or how much capital is required to keep the growth. Sometimes, there would be volume growth, but the margins could be under pressure," he says. Some experts believe India's higher stock valuations can be justified if foreign investors keep buying stocks. Devendra Nevgi, Founder of Delta Global Partners, says, "The current valuations don’t justify the long term growth potential of India. The market is trading 17 times the earnings potential in 2011 and around 13.8 times the earnings forecast for 2012. It even carries a premium of around 50% to other emerging markets and around 25% premium to other global markets." He adds this premium can be justified with continued foreign investor confidence. So, while the market looks expensive now, many believe deeper analysis and foreign money flows are key to understanding this premium.