The gain came even as the Covid-hit economy entered a technical recession, with the previous quarter’s GDP growth rate at negative 7.5%, reducing exports and retail inflation close to 7%, which is well above the RBI’s target level of 6%. On Friday, the Nifty on the NSE also closed at a new high of 13,761 points.
But how does sensex’s meteoric risk compare to other economic indicators? Here is a snapshot in seven charts:
While per capita income has seen a steady increase since the 1990s, economic growth has lost momentum and has not kept pace with sensex’s rise.
Among the global indices, after the Nasdaq (86%), the sensex with an increase of 80% is the one that has recovered the most since it hit a low in March this year.
Meanwhile, India’s market capitalization or mcap is approaching the rupee 200 lakh crore mark and pulling the country’s mcap-to-GDP ratio close to parity.
The market rebound in recent months has pushed the market capitalization-to-GDP ratio beyond 80 percent, a marked improvement over the two-year average of 75 percent.
However, India is still below the world average with respect to the mcap / GDP ratio.
Cautious sign?
An all-time high price / earnings (PE) ratio, the measure of how much investors are willing to pay for each rupee of earnings, is a sign to be cautious.
Current PE Ratios of Global Indices:
Already in its 40,000, sensex is apparently now taking fewer than 10 sessions to beat each successive 1,000 point mark.
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