Investing in the Indian market of up to the $ 3 trillion mark is a double-edged sword and investors should not learn too much at the highest level. On the positive side, it demonstrates the confidence of investors (domestic and international) in India’s growth story despite the second wave of growth of COVID-19.
On the other hand, if growth is stagnant, investors will lower prices as they become accustomed to lower growth expectations and thus reduce market capitalization. Sometimes when a record is reached behind conflicting foundations, it can best be read as a warning sign.
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Market capitalization needs to be viewed in conjunction with factors such as the relative size and most importantly, the Cap Cap market ratio to the country’s GDP. By average size, while India is ranked 8th in terms of world market value of $ 3 trillion, the US market value is 16x that of India at $ 49 trillion. The next largest economy, China, is $ 12.4 trillion, followed by Japan with $ 6.2 trillion. This reflects the size of the markets supported by their economic size.
After continuing confidence in revenue (local and global), the Indian Market to GDP ratio will now be 1.1x while its long-term average is almost 0.75x. Also, by comparison, the current average in the USA is close to 2x and other developed countries average 1.4 to 1.8x while China’s Cap Cap Market and GDP average is 0.71x.
While negotiations can be negotiated if the Indian markets are overlooked and if the adjustment is likely to drop to a minimum, it is important to understand that ultimately GDP growth is what will boost market capitalization. After continued growth and more companies are listed on the exchange list, the markets will be more expensive and that is why they are raising money to make money in the market.
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Research has shown that India’s financial growth has grown in the CAGR by about 18 percent over the past two decades. By taking a saving CAGR of 10 percent, markets could take six years to cross the $ 5 trillion mark, while assuming it is a more reliable CAGR by 15 percent, it could take four years to cross the mark.
Without revealing the negative feelings and circumstances of Mr. A market that will increase or decrease market value, one should pay close attention to economic growth. India’s ability to sustain growth after the effects of the second wave of COVID-19 will influence temporary movement.
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At 32x, India’s multiple PE is probably one of the highest and we can see a correction. While these adjustments may undermine market capitalization, they may be healthy in the market as the estimates will be reset at the appropriate levels.
In the long run, however, India’s stagnant growth rate of more than 7 percent a year could have a significant impact on market growth.
As India grows, more and more companies will need to come to the market to raise money by listing and thus increase the other half of the figure. A much bigger situation lies in the continued growth of our economy. If that happens, India could reach $ 5 trillion GDP and the Mark Capitalization mark sooner than expected.