Indian share markets recovered in the afternoon session to finish marginally lower amid mixed international markets. At the closing bell, the BSE Sensex closed lower by 21 points and the NSE Nifty finished lower by 16 points. The S&P BSE Mid Cap finished up by 0.3% while S&P BSE Small Cap finished up by 0.1%.
Losses were largely seen in realty stocks, oil & gas stocks and metal stocks. Bank stocks and consumer durables' stocks witnessed majority of the buying momentum.
We generally refer to PE or price to earnings ratio to gauge whether the market is undervalued or overvalued. If we go by this ratio, the Indian market is clearly in overvaluation territory.
There is still another ratio, which is frequently used to evaluate the valuations. The market capitalization to GDP ratio.It is one of Buffett's favorite indicators of broader market value. The market cap of all the listed companies in the country divided by the gross domestic product (GDP) of the country gives us this ratio.
Market Cap to GDP Ratio Close to 100%
The idea behind this ratio is simple. Stock prices are derived from expected earnings for corporates and GDP represents revenue of the country. This gives investors an estimate of whether the two are moving in tandem. A ratio above 100% shows overvaluation and one below 50% shows that the market may be undervalued.
Even this ratio is showing valuations reaching its peak levels. India's market cap to GDP ratio reached 95%. This ratio was more than 100% after the 2007 bull run. Stock prices had seen a significant meltdown after that amid the global financial crisis.
Asian stock markets finished lower today with shares in Japan leading the region. The Nikkei 225 is down 0.87% while China's Shanghai Composite is off 0.57% and Hong Kong's Hang Seng is lower by 0.53%. European markets are higher today with shares in Germany leading the region. The DAX is up 0.28% while France's CAC 40 is up 0.26% and London's FTSE 100 is up 0.23%.
Rupee was trading at Rs 64.99 against the US$ in the afternoon session. Oil prices were trading at US$ 60.98 at the time of writing.
Yes bank share price finished up by 1.9% on the BSE after it was reported that the bank has acquired 17.31% stake in Fortis Healthcare Ltd following invocation of nearly 90 million pledged shares last month.
On February 15, the Supreme Court lifted its stay on sale of shares of Fortis Healthcare pledged with banks by the promoters Singh brothers (Malvinder Mohan Singh and Shivinder Mohan Singh) before August 31, allowing financial institutions, including Axis Bank and Yes Bank, to sell the pledged shares.
Subsequently, the stake of promoter firm Fortis Healthcare Holdings along with promoters (Singh brothers) and other family entities have come down to 5.87% from 34.43% earlier.
Fortis Healthcare share price surged 4.1%.
Moving on to news from economy, continuing its easing trend for the third straight month, India's inflation on wholesale level softened in the month of February, with a sustained dip in food articles prices.
The fall in non-food articles prices also supported the wholesale price inflation (WPI) to come in line with the lower retail inflation.
According to the latest data released by the government, WPI stood at 2.48% (provisional) in February as against 2.84% (provisional) for the previous month and 5.51% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 2.30% compared to a build-up rate of 4.92% in the corresponding period of the previous year.
Component wise, primary articles index having weight of 22.62%, dropped 1.3% to 128.0 (provisional) in February from 129.7 (provisional) for the previous month.
Among the primary articles, the index for 'Food Articles' group declined by 2.0% to 137.8 (provisional) from 140.6 (provisional) for the previous month and the index for 'Non-Food Articles' group was down by 0.1% to 120.6 (provisional) from 120.7 (provisional) for the previous month. On the flip side, the index for 'Minerals' group rose 0.2% to 122.2 (provisional) from 121.9 (provisional) for the previous month and the index for 'Crude Petroleum & Natural Gas' group was up by 2.9% to 80.6 (provisional) from 78.3 (provisional) for the previous month.
In news from pharma sector, Strides Shasun share price surged 2.6% in today's trade after the company received approval from the US health regulator for its generic Efavirenz tablet used for treatment of HIV Type-1 infected adults and adolescents.
Efavirenz tablet is the generic version of Sustiva tablets of Bristol-Myers Squibb Company. The product will be manufactured at the company's oral dosage facility at Bangalore and will be marketed by Strides Pharma Inc in the US market.
Strides said the US market for Efavirenz Tablets USP, 600 mg is approximately US$ 115 million.
And here's a note from Profit Hunter:
KPIT Technologies is among the most active stock in the market today - up 4.25%. Let's have a look at its chart.
The stock bottomed out at Rs 10 in March 2009 and traded in a strong uptrend to hit a high of 232 in January 2015. It then corrected nearly 63% to hit a low of 85 in June 2015. Post that, it more or less traded in a range.
It picked up steam in August 2017 where the stock rallied from the low of 104 to hit a new 52-week high of 230 in today's session. But now the stock is near its January 2015 high from where it corrected nearly 63%.
So it will be interesting to see if the stock will repeat the history and correct like it did in January 2015 or will it continue with the current momentum.
KPIT Near January 2015 High
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