India, June 7 -- A stock can be considered overvalued by analysing key metrics such as the Price-to-Earnings (P/E) ratio in comparison to the industry average. The P/E ratio measures a company's current share price relative to its earnings per share (EPS) and is a widely used indicator for assessing whether a stock is priced fairly or trading above its intrinsic value.

A lower P/E ratio compared to the industry average may indicate that a stock is undervalued, meaning its share price is low relative to its earnings. Buying such stocks can offer a potential buying opportunity, as the market may not yet have fully recognised the company's true value; if the firm performs well or sentiment improves, the stock price may rise, allowing invest...