Red-hot rally: BSE firms’ market capitalisation crosses Rs 200 trillion


The sum of the market value of BSE-listed companies crossed Rs 200 trillion for the first time, on Thursday. The feat comes a day after the S&P BSE Sensex closed above the coveted 50,000-mark.


The Sensex, on Thursday, ended at 50,614.29, up 358.54 points.


The combined of the National Stock Exchange of India-listed companies was a shade lower at Rs 199.1 trillion, based on Thursday’s closing.


The Nifty50 index ended the session at 14,895.65, up 105.70 points.


In dollar terms, the market cap figure of BSE-listed firms is $2.75 trillion — the seventh highest globally. The country’s market cap-to-GDP ratio is now more than 100 per cent. Its nominal GDP (revised estimate for FY21) at current prices is around Rs 195 trillion.


ALSO READ: Retail investor stake in 115 bankrupt companies nears Rs 1,000 cr


The combined market cap of BSE-listed companies had topped the Rs 100 trillion-mark in December 2014. Back then, the market cap-to-GDP ratio was at 80 per cent. In September 2007, when the market cap crossed Rs 50 trillion, the ratio was similar to the current level. The had come off more than 50 per cent in the following year due to the global financial crisis.


In less the one year, India’s market cap (based on BSE-listed companies) has nearly doubled. At the peak of the coronavirus-induced sell-off in March 2020, the market cap had plunged to Rs 102 trillion.


Based on BSE-listed firms, India’s market cap had crossed Rs 10 trillion at the turn of the century. Today, the country has two companies that are valued at more than Rs 10 trillion each. Since 2000, India’s market cap has grown at an annualised rate of 15 per cent.


ALSO READ: Sensex, Nifty keep run going; all eyes on RBI’s policy decision on Friday



India’s share in global market cap is about 2.5 per cent, similar to developed world economies, such as France, Canada, and Germany.



chart


However, most of these quote at a much lower price-to-earnings (P/E) than India.


The benchmark Sensex currently quotes at a trailing 12-month P/E of highest-ever 34 times. Analysts say valuations look optically high as earnings over the past one year have been depressed due to the Covid-19 pandemic.


Even on a two-year forward basis, the benchmark indices quote at 22 times, much higher than the long-term average of about 16 times.


The consensus analysts estimate for corporate earnings growth for the next two years is 70 per cent. The estimate was drawn before the Union Budget presented on Monday. The growth-focused Budget has raised hopes that companies will be able to achieve these lofty expectations.


The have posted four straight days of gains this week, rallying 9.4 per cent.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor