Market cap-to-GDP ratio currently highest since FY10: Report

The market cap-to-GDP ratio of India is currently highest since FY 2009-10, said a report by Motilal Oswal Institutional Equities.

In its ‘India Strategy’ report, Motilal Oswal noted that the market cap-to-GDP ratio has been volatile.

From 79 per cent in FY19, it came to 56 per cent in FY20, it said, adding that it is likely to reach 91 per cent in the current financial year.

“The rally since June’20 has led to an Mcap/GDP ratio at the highest levels since FY10,” it said.

The lowest level in the last two decades was 42 per cent in FY04. The ratio hit a peak of 149 per cent in December 2007 during the 2003-08 bull run.

The report said that Nifty 50 market-cap continues to trade at all-time highs. Nifty M-cap is currently 13 per cent above December 2019 levels.

However, Nifty Mid-cap 100’s market cap is still down 12 per cent from the peak, although it is above December 2019 levels.

It noted that 45 of Nifty50 stocks gained last month. So far in 2020, 31 Nifty stocks have delivered positive returns, said the report.

Further, 182 of BSE-200 constituents gained in November 2020, with 116 stocks posting over 10 per cent gains MoM, leading to a broad-based rally.

So far in 2020, around 120 of BSE-200 constituents posted positive returns, with 45 stocks returning over 30 per cent.

The report also observed that the Indian equity market witnessed a significant dichotomy in November as the domestic institutional investments (DII) logged the highest outflow of funds at $5.9 billion, although net foreign institutional investments (FII) purchase touched an all-time high for any month ever.

“Nov’20 witnessed a dichotomy in flows between FII and DII. FII inflows were at the highest levels at $8.3 billion, while DII sustained the highest net outflows of $5.9 billion,” the report said.