Indian share markets continued to rally in the afternoon session amid firm global cues after trade war worries eased last week. Gains were largely seen in software stocks, FMCG stocks and energy stocks.
The BSE Sensex is trading higher by 358 points and the NSE Nifty is trading up by 114 points. Meanwhile, the BSE Mid Cap index is trading up by 0.1% & the BSE Small Cap index is up by 0.2%. The rupee is trading at 65.08 to the US$.
The Market cap to GDP ratio for Indian companies is close to dangerously high levels. While this is still some way off the peak of FY-08, when it had once reached close to 150, it's relatively high.
The Warren Buffett Indicator Suggests Indian Equity Market Is Overvalued
FY17 saw this ratio reach close to 80. It is also expected to increase further given the moderate growth expectations in India's GDP for FY18. Warren Buffett once considered this as one of the best valuation metrics to gauge the markets.
Past history shows some correlation between the ratio and the share market. 2008 saw Sensex decline by 38%, when this ratio crossed the 100 mark. Also, the market has bounced back sharply when this ratio was low.
The basic assumption in this ratio is that whenever the GDP of the country grows, the market performance will reflect it. Also, when stocks do well, it can be extrapolated to assume the Indian economy is doing well.
L&T share price was trading on an encouraging note (up 0.9%) after the company's construction arm -- L&T Construction -- has bagged orders worth Rs 25.97 billion across various business segments.
The Transportation Infrastructure business has secured an order worth Rs 10.47 billion. The company has bagged a prestigious order has been received from the National Highways Authority of India (NHAI) for the construction of the 8.7 Km long Dwarka Expressway (Package - IV) in the state of Haryana on EPC mode.
The Water & Effluent Treatment Business has secured an order worth Rs 9.49 billion. Besides, the Buildings & Factories Business has secured an order worth Rs 6.01 billion.
In another development, Suzlon share price is trading up by 1.8% as the company bagged an order for development of 75 megawatt (MW) wind energy project from an independent power producer through Maharashtra State Electricity Distribution Company Ltd (MSEDCL) bid.
Suzlon will install around 36 units of S111-140m wind turbine generators (WTGs) with rated capacity of 2.1 MW each.
Moving on to news from telecom sector. Bharti Airtel share price is trading up by 2.3% in the noon session after the company announced the launch of its VoLTE services in Kolkata.
Airtel VoLTE, which works over 4G, will enable customers across the city to enjoy HD quality voice calls with faster call set up time. Airtel has been launching VoLTE based services in parts of the country in the recent months. Customers can make calls to any mobile or landline network using Airtel VoLTE.
Presently, most of the new 4G handsets are VoLTE compatible. There will be no additional data charges for VoLTE and calls will be billed as per existing plan or packs benefits.
In news from mining sector, as per a leading financial daily, the Centre is expected to get around Rs 80.44 billion on account of dividend from Coal India as the miner's board approved payment of interim dividend for the financial year 2017-18 at a rate of Rs 16.50 per share.
The company's total payout on account of this would be to the tune Rs 102.42 billion.
The government holds 78.55% of share in the company and the rest is public shareholding. In addition to dividend amount, the Central government is also expected to get around Rs 20.85 billion on account of tax.
Coal India share price was trading down by 2.5% at the time of writing.
In news from the economy, the International Monetary Fund (IMF) has said that Indian economy is on its path to recovering from the negative impact of demonetization and disruption caused by roll out of goods and services tax (GST).
It further pointed out that in recent years, India's economy has expanded strongly, due to macroeconomic policies that emphasize stability and efforts to tackle supply-side bottlenecks and structural reforms. It added that disruptions from note ban and the rollout of GST did slow growth.
It also said that the rollout of the GST was a landmark accomplishment that can be expected to enhance efficiency of intra-Indian movement of goods and services, create a common national market, enhance tax buoyancy, and boost GDP growth and job creation.
Calling development, a welcome change, it said that the growth prospects remain optimistic. Adding further, it said that the Indian economy would benefit from further reforms, such as enhancing health and education, encouraging private and public investment, and improving the efficiency of the banking and financial system.
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