Buffett, Shiller share a worry on Indian equity
Indian markets’ valuation measured using Buffett’s m cap-to-GDP ratio has surpassed its historical average
The Indian economy is likely to grow by 9.2% in FY22, according to the National Statistical Office’s (NSO’s) first estimate of gross domestic product (GDP) growth for the financial year. This is lower than the Reserve Bank of India’s forecast of 9.5% and points to a slower growth for the country in the second half of FY22.
However, the Indian stock market isn’t perturbed. The new year has begun on an upbeat note with the benchmark Nifty50 index rising by 3.7% so far, surpassing the 18,000 mark on Monday. Unsurprisingly, the Indian equity market’s valuation measured using Warren Buffett’s market capitalization-to-GDP ratio has surpassed its historical average. “It is probably the best measure of where valuations stand at any given moment," according to Buffett. For FY22, the reading stands at 119%, ahead of its long-term average of 79%, showed Motilal Oswal Financial Services Ltd’s latest data. This ratio is the highest in at least a decade.
No comments:
Post a Comment