Demand momentum for jewellery continued in Q1
This sharp growth was due to robust consumer demand and stocking up ahead of upcoming festivals including Akshaya Tritiya in May 2021.
The market cap-to-GDP ratio of India is likely to recover in the current financial year (FY21) to 80 per cent, after a drop in FY20, said a report by Motilal Oswal Institutional Equities.
The “BULLS & BEARS (November 2020): India Valuations Handbook” noted that in the last financial year, the market-to-GDP ratio fell to 56 per cent from 79 per cent in FY19.
“Market cap-to-GDP ratio has been volatile as it moved from 79 per cent in FY19 to 56 per cent (FY20 GDP) in Mar’20 to 80 per cent now (FY21E GDP) – above its long-term average of 75 per cent,” it said.
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The report, however, said that India’s share in world market-cap is at 2.3 per cent, below its historical average of 2.5 per cent. Over the last 12 months, world market cap has increased 9 per cent ($7.3 trillion) while India’s market-cap has remained flat.
It further said that the Nifty is trading at 12-month forward return on equity (RoE) of 13 per cent, below its long-term average of 13.8 per cent.
Last month, India was among the positive-performing markets globally. In October, markets in Indonesia (up 5 per cent), followed by India (4 per cent growth) and MSCI EM (Emerging Markets) (up 2 per cent) closed higher in local currency terms.
On the other hand, Russia (down 9 per cent), UK (5 per cent) and the US (down 3 per cent) were the major laggards.
“Indian equities are trading at 24X FY21E earnings. Brazil is the only market trading at a premium, while other key markets continue to trade at a discount to India,” it said.
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