Historical Data of Total Market Cap over GDP in India

 

Key information about India Market Capitalization: % of GDP

• India Market Capitalization accounted for 103.4 % of its Nominal GDP in Dec 2022, compared with a percentage of 112.4 % in the previous year
• India Market Capitalization: % Nominal GDP is updated yearly, available from Dec 1993 to Dec 2022
• The data reached an all-time high of 146.4 % in Dec 2007 and a record low of 23.0 % in Dec 2001

Original and Modified Historical Ratio of Total Market Cap over GDP (%)

The current ratio of total market cap over GDP for India is 86.86%. The recent 10 year high was 119.85%; the recent 10 low was 58.11%. If we assume that the ratio will reverse to the recent 10 years mean of 88.58% over the next 8 years, the contribution to expected annual return is %.

Based on the modified version, the current TMC / (GDP + Total Assets of Central Bank) Ratio for India is 77.64%. The recent 10 year high was 101.92%; the recent 10 low was 51.59%. If we assume that the ratio will reverse to the recent 10 years mean of 79.06% over the next 8 years, the contribution to expected annual return is %.

This is the detailed historical chart of the original TMC / GDP ratio and modified TMC / (GDP + Total Assets of Central Bank) ratio.

Based on these historical valuations, we have divided market valuation into five zones:

Ratio = Total Market Cap / GDP	Valuation
Ratio ≤ 62%	Significantly Undervalued
62% < Ratio ≤ 80%	Modestly Undervalued
80% < Ratio ≤ 97%	Fair Valued
97% < Ratio ≤ 115%	Modestly Overvalued
Ratio > 115%	Significantly Overvalued
Where are we today (2023-01-30)?	Ratio = 86.86%, Fair valued

Based on these modified historical valuations, we have divided market valuation into five zones:

Ratio = Total Market Cap / (GDP + Total Assets of Central Bank)	Valuation
Ratio ≤ 55%	Significantly Undervalued
55% < Ratio ≤ 71%	Modestly Undervalued
71% < Ratio ≤ 87%	Fair Valued
87% < Ratio ≤ 103%	Modestly Overvalued
Ratio > 103%	Significantly Overvalued
Where are we today (2023-01-30)?	Ratio = 77.64%, Fair valued

The Nifty is trading at a 12-month forward RoE (Return on Equity) of 15.6 per cent, above its long-term average, Motilal Oswal said in its report. 

                                    

Bank credit growth moderates to 14.9% on higher base effect

 After rising for many months, bank credit growth slowed to a five-month low of 14.9 per cent in the fortnight ended December 30, due to the higher base effect of the second half of the previous fiscal.

In the previous fortnight ended December 16, 2022, bank credit grew by 17.4 per cent. Since August 2022, bank credit has been growing upwards of 15 per cent. In the fortnight ended July 29, 2022, credit growth stood at 14.5 per cent.

In October 2022, credit offtake rose to a decade high of 17.9 per cent on year-on-year basis, driven mainly by retail credit, higher working capital demand amidst high inflation and lower funds raised in the capital market.

Last month, Reserve Bank of India Governor Shaktikanta Das had said the over 17 per cent rise in advances seen in October 2022 was due to a low base of the previous two years when the growth in credit was subdued due to the pandemic.

“The credit growth at the current point is certainly far away from, what you call, exuberance or something like that. It is definitely very steady. We are monitoring it very carefully,” Das had said in the event held in December.

RBI report shows credit growth spurs public lenders’ balance sheets to 10-year high in first half of FY23

 

Commercial banks may have to raise deposit rates more to meet a surge in credit demand; while banks have swiftly transmitted increases to lending rates, deposit rates have been laggards for most’

Commercial banks may have to raise deposit rates more to meet a surge in credit demand, the central bank added. The Reserve Bank has raised rates aggressively this year to tame inflation. While banks have swiftly transmitted the increases to their lending rates, deposit rates have been laggards for most.

“During 2021-22, as credit growth picked up and deposit growth moderated, the incremental credit-deposit (C-D) ratio reached a four-year high,” the RBI said in its report. Loans of Indian banks rose 17.5% in the two weeks to December 2 from a year earlier, while deposits rose 9.9%, the latest data from the RBI showed earlier in the month.

“Incremental credit growth in FY2023 is expected to remain at an all-time high of Rs.18.0-19.0 trillion in FY2023, which will be significantly higher than the previous high of Rs. 11.4 trillion in FY2019

Inflation undershoots RBI's Oct-Dec forecast, but Feb rate hike still on the cards

 India's headline retail inflation rate fell for the third month in a row in December, coming in at 5.72 percent – 18 basis points below the consensus estimate of 5.9 percent – the statistics ministry said on January 12.

More importantly, Consumer Price Index (CPI) inflation averaged 6.1 percent in October-December, well below the Reserve Bank of India's (RBI) forecast of 6.6 percent.

any other quarter, inflation undershooting the central bank's forecasts by such a large margin would send the market's hopes soaring. However, these are extraordinary times.

"Despite two months of below 6 percent headline inflation, we think the RBI is unlikely to feel very comfortable with the details, given demand-driven price pressures remain elevated," noted Rahul Bajoria, chief India economist at Barclays.

"We expect the central bank to maintain a broadly hawkish policy stance going into the February monetary policy meeting and deliver a 25-basis-point hike, taking the repo rate to 6.5 percent," Bajoria added.