An analysis of market-capitalisation to GDP ratio reveals that India following a sharp erosion in its market capitalisation appears to be quite attractive compared to other developed markets.
In the last two weeks, escalating geopolitical tensions with the neighbourhood nation continued to dominate Indian equities, but broader indices remained resilient with Nifty50 index and BSE Sensex ending the month with marginal gains.
All thanks to the foreign portfolio investors (FPIs) that infused over Rs 17,200 crore into Indian equities in February. In January, FPIs were net sellers in the Indian equities.
Growing prospects of the Modi-led NDA government coming back to power in the upcoming general elections and improving the outlook for banks in the wake of remarkable improvement in asset quality recorded in the December 2018 quarter saw renewed buying interest in the Indian equity market.
he frontline key indices (Nifty 50 index & BSE Sensex) have corrected 7-8 percent in the last six months led by a liquidity crisis in MSME segment followed by IL&FS saga, geopolitical trade war and unwinding of fiscal stimulus by the global bankers, but from a market capitalisation perspective, investor wealth has eroded significantly.
A sharp correction in mid and smallcap stocks was the prime reason for the erosion of wealth of BSE companies as their earnings could not keep pace with their rising valuations along with corporate governance issues and liquidity crisis.
In the last six months, Nifty midcap and smallcap indices fell by 16 percent and 21 percent, respectively.
An analysis of market-capitalisation to GDP ratio reveals that India following a sharp erosion in its market capitalisation appears to be quite attractive compared to other developed markets.
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