India's market capitalisation to GDP ratio hits 13-year high
Published On: Thursday, September 2, 2021 | By: Team KnowMyStock
The listed companies in India are worth 122 percent of India’s latest annualised gross domestic product (GDP) — the highest since December 2008, when it had hit an all-time high of around 150 percent. The ratio was 112 percent at the end of June and 103 percent at the end of March. India’s current market capitalisation (m-cap) to GDP ratio is nearly 55 percent higher than the 15-year median ratio of 79 percent. The combined m-cap of nearly 3,500 companies listed and actively traded on the BSE reached a new high of Rs 250 trillion on Tuesday and is up 120 percent since the end of March 2020, and 33 percent since the beginning of the current calendar year. This has created a wedge between stock valuations and India’s macroeconomic fundamentals.
India’s current m-cap to GDP ratio has raised concerns about the high stock valuations on Dalal Street. In the last 15 years, the ratio has been around 79 per cent on average, with 150 per cent being the highest, and 52.4 per cent the lowest, touched at the end of March 2005.
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