India back in top 10 global markets overtaking Australia

[Chanakya's_Chant]

India back in top 10 global markets
Overtakes Australia following the election rally; market cap could cross $1.5 trillion in 12 months, close to that of Switzerland

The total value of India’s listed companies might well waltz across the $1.5-trillion mark, as well as come close to climbing another step on the top-10 club of countries by market capitalisation if current growth expectations are anything to go by. It overtook Australia to enter the top-10 club, following the recent election rally.

India’s market capitalisation has risen by 25.1 per cent so far in 2014. At $1.42 trillion, Indian companies are now more valuable than Australia’s, whose companies are valued at $1.4 trillion; according to Bloomberg data.

Brokerage estimates suggest a further upside in the days ahead. Citigroup, Deutsche Bank, Bank of America Merrill Lynch and Nomura have suggested upsides of seven to 16 per cent; all targets to be achieved in 12 months or less. An average gain of 11.3 per cent.

This would take India’s market cap to $1.58 trillion within 12 months. This would be within kissing distance of the next in line in the top-10 list, Switzerland, which has a market capitalisation of $1.61 trillion.

UBS Securities India Market Strategy said investors would increasingly look to discount future earnings and growth, paying a premium for this and pushing markets higher, as a result.

“We believe investors will be willing to give a premium for growth hope and also look beyond FY15 earnings estimates. By the end of 2014, investors would start looking at FY16 estimates. Based on our top-down expectation of 15 per cent earnings growth in FY16, and 15x PE, we set our Nifty target for end-2014 at 8,000. There could be an upside to this target based on how policy making evolves over the next few months, which could flow through to earnings estimates and multiples higher than average,” said the report dated May 16 and authored by analysts Gautam Chhaochharia and Sanjena Dadawala.
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A Morgan Stanley India economics and strategy report also supported the suggestion that earnings could pick up. “Given the rise in corporatisation of the Indian economy, the coming acceleration in GDP (gross domestic product) should benefit the profit outlook. Historically, we have observed a strong correlation between corporate profits and macro growth and do not see this changing in the coming years. Also, at this stage, margin forecasts are pinned to the performance of the down-cycle of the past five years. The relative share of profits to wages is now at a low point and a mean reversion is in sight. Thus, the profit share in GDP will likely rise,” said the May 18 report authored by Chetan Ahya, Ridham Desai, Sheela Rathi, Utkarsh Khandelwal and Upasana Chachra.

The rise in market capitalisation rankings could also be aided by an appreciating rupee, at least in the short term. A rising rupee means the value of these companies would increase in dollar terms, even without share prices going up.

“We forecast the rupee to strengthen meaningfully compared to forwards, anticipating a structural shift in policy decisiveness and pro-business sentiment under the new government. Over the second quarter of 2014, incremental flows as well as the positive carry are likely to contribute towards rupee appreciation, although the longer-term trajectory for the dollar-rupee value remains upward sloping, given India’s inflation differentials against the US and our expectation for eventual dollar strength,” added the Morgan Stanley report.

Also aiding the upside is the fact that mid-caps, and stocks which have been beaten down, would be likely to rise even more than the rise in frontline stocks predicted by these four brokerages. Deutsche Bank in its May 16 India equity strategy report suggested such stocks are expected to do well in the days ahead. Research analysts Abhay Laijawala and Abhishek Saraf said they ‘expect mid-caps to continue to rally as a high-beta play on economic improvement.’
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Source:- India back in top 10 global markets | Business Standard

 

[Chanakya's_Chant]

Market cap crosses $1.5 trillion after 4 years

The recent spurt in the market has also propelled India to be the 10th biggest in terms of market cap, and the second biggest in the BRIC group of countries, behind China which is at $3.23 trillion.
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MUMBAI: The country's market capitalization has jumped by about half a trillion dollars in less than a year to regain the $1.5-trillion mark - after about four years - on the back of the NaMo wave that has changed the perception about the Indian market among global fund managers.

The recent spurt in the market has also propelled India to be the 10th biggest in terms of market cap, and the second biggest in the BRIC group of countries, behind China which is at $3.23 trillion. In rupee terms, India's market cap is at an all-time high of Rs 89.8 lakh crore.

At the current level, India's market cap-to-GDP ratio is about 0.79. However, this is much lower than the levels seen during the last bull market of 2007-08, when the ratio was nearly 2.
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One of the main reasons for this sharp increase in India's market cap-to-GDP ratio is the change in foreign investors' perspective about the Indian market. "This change is mainly because the risk premium from the Indian market has turned from negative to positive in a very short time," said Soumya Kanti Ghosh, chief economic advisor, SBI.

Risk premium is the difference between the risk-free return that an investor gets by investing in government securities and what the investor gets by investing in the stock market. In late-July and early-August last year, the benchmark yield was at a high of 9.10%, while the sensex had given a return of 7.1% during the one-year period to August 2013. In comparison, the benchmark gilt yield is now down to about 8.5%, while the sensex in the last one year has given a return of 32.2%, that is nearly four times the risk-free return.

"This (the positive risk premium) will provide attractive buying opportunities for investors and if sustained over a longer period, could also trickle down to retail investors," Ghosh said.

As foreign investors have stepped up their buying - net buying by FIIs in the last two sessions itself is about $450 million - along with the sensex, about 25 other indices from NSE and BSEalso scaled new all-time highs on Friday, exchange data showed. And since last July, when the rupee went into a tailspin after India's economic fundamentals had deteriorated sharply, FIIs have net pumped in nearly $16 billion, according to Sebi data.

In Friday's market, energy sector stocks led the surge with ONGC up 10.6% higher at Rs 464, while GAIL gained 7.5% to Rs 420 and RIL was up 3% at Rs 1,120. Among the other top gainers were Hero MotoCorp up 3.7% at Rs 2,682 and HDFC, up 3% at Rs 935.

Among the handful of laggards were Sesa Sterlite, down 2.5% at Rs 3.7, and Infosys, up 1.3% at Rs 3,000. The slide in Infosys came on the back of news that another of its top executives is on his way out. This is the 13th resignation from Infosys in a little over a year.

Source:- Market cap crosses $1.5 trillion after 4 years - The Times of India

 

[bolo]

Lol. Market capital don't really mean much.

 

[Chanakya's_Chant]

Lol. Market capital don't really mean much.

But 25.11% year till date and 13.12% month till date change does and that's petty impressive too! - no one even comes close - Risk premium in comparison, the benchmark gilt yield is now down to about 8.5%, while the sensex in the last one year has given a return of 32.2%, that is nearly four times the risk-free return! This (the positive risk premium) will provide attractive buying opportunities for investors and if sustained over a longer period, could also trickle down to retail investors - The rupee would be further strengthened with the investments coming in

 

[Markus]

Looking at the numbers, it seems, India has been the only real beneficiary this year.

All bcoz of Narendra Modi.

Nifty was at 5400 when BJP Modi as PM candidate, ever since then, markets never looked back and now Nifty may breach 8000 this month itself.

Bravo. Go Nifty Go. Dont stop at 8000, go and breach 10000 level as well.

 

[amitkriit]

Let us wait for the Union budget. I hope that it is not going to be a socialist budget. Experts are predicting a turn-around after 2016, not before that.

 

[Ajaysingh]

All th Best ..hoping India continues to be on progress path