Market cap crosses $1.5 trillion after 4 years
MUMBAI: The country's market capitalization has jumped by about half a trillion dollars in less than a year to regain the $1.5-trillion mark - after about four years - on the back of the NaMo wave that has changed the perception about the Indian market among global fund managers.
The recent spurt in the market has also propelled India to be the 10th biggest in terms of market cap, and the second biggest in the BRIC group of countries, behind China which is at $3.23 trillion. In rupee terms, India's market cap is at an all-time high of Rs 89.8 lakh crore.
At the current level, India's market cap-to-GDP ratio is about 0.79. However, this is much lower than the levels seen during the last bull market of 2007-08, when the ratio was nearly 2.
One of the main reasons for this sharp increase in India's market cap-to-GDP ratio is the change in foreign investors' perspective about the Indian market. "This change is mainly because the risk premium from the Indian market has turned from negative to positive in a very short time," said Soumya Kanti Ghosh, chief economic advisor, SBI.
Risk premium is the difference between the risk-free return that an investor gets by investing in government securities and what the investor gets by investing in the stock market. In late-July and early-August last year, the benchmark yield was at a high of 9.10%, while the sensex had given a return of 7.1% during the one-year period to August 2013. In comparison, the benchmark gilt yield is now down to about 8.5%, while the sensex in the last one year has given a return of 32.2%, that is nearly four times the risk-free return.
"This (the positive risk premium) will provide attractive buying opportunities for investors and if sustained over a longer period, could also trickle down to retail investors," Ghosh said.
As foreign investors have stepped up their buying - net buying by FIIs in the last two sessions itself is about $450 million - along with the sensex, about 25 other indices from NSE and BSE also scaled new all-time highs on Friday, exchange data showed. And since last July, when the rupee went into a tailspin after India's economic fundamentals had deteriorated sharply, FIIs have net pumped in nearly $16 billion, according to Sebi data.
In Friday's market, energy sector stocks led the surge with ONGC up 10.6% higher at Rs 464, while GAIL gained 7.5% to Rs 420 and RIL was up 3% at Rs 1,120. Among the other top gainers were Hero MotoCorp up 3.7% at Rs 2,682 and HDFC, up 3% at Rs 935.
Among the handful of laggards were Sesa Sterlite, down 2.5% at Rs 3.7, and Infosys, up 1.3% at Rs 3,000. The slide in Infosys came on the back of news that another of its top executives is on his way out. This is the 13th resignation from Infosys in a little over a year.
TOI
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Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
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The recent spurt in the market has also propelled India to be the 10th biggest in terms of market cap, and the second biggest in the BRIC group of countries, behind China which is at $3.23 trillion. In rupee terms, India's market cap is at an all-time high of Rs 89.8 lakh crore.
At the current level, India's market cap-to-GDP ratio is about 0.79. However, this is much lower than the levels seen during the last bull market of 2007-08, when the ratio was nearly 2.
One of the main reasons for this sharp increase in India's market cap-to-GDP ratio is the change in foreign investors' perspective about the Indian market. "This change is mainly because the risk premium from the Indian market has turned from negative to positive in a very short time," said Soumya Kanti Ghosh, chief economic advisor, SBI.
Risk premium is the difference between the risk-free return that an investor gets by investing in government securities and what the investor gets by investing in the stock market. In late-July and early-August last year, the benchmark yield was at a high of 9.10%, while the sensex had given a return of 7.1% during the one-year period to August 2013. In comparison, the benchmark gilt yield is now down to about 8.5%, while the sensex in the last one year has given a return of 32.2%, that is nearly four times the risk-free return.
"This (the positive risk premium) will provide attractive buying opportunities for investors and if sustained over a longer period, could also trickle down to retail investors," Ghosh said.
As foreign investors have stepped up their buying - net buying by FIIs in the last two sessions itself is about $450 million - along with the sensex, about 25 other indices from NSE and BSE also scaled new all-time highs on Friday, exchange data showed. And since last July, when the rupee went into a tailspin after India's economic fundamentals had deteriorated sharply, FIIs have net pumped in nearly $16 billion, according to Sebi data.
In Friday's market, energy sector stocks led the surge with ONGC up 10.6% higher at Rs 464, while GAIL gained 7.5% to Rs 420 and RIL was up 3% at Rs 1,120. Among the other top gainers were Hero MotoCorp up 3.7% at Rs 2,682 and HDFC, up 3% at Rs 935.
Among the handful of laggards were Sesa Sterlite, down 2.5% at Rs 3.7, and Infosys, up 1.3% at Rs 3,000. The slide in Infosys came on the back of news that another of its top executives is on his way out. This is the 13th resignation from Infosys in a little over a year.
TOI
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
--
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To unsubscribe from this group and stop receiving emails from it, send an email to Productupdatesforamc+unsubscribe@googlegroups.com.
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