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NEW DELHI: India s market capitalisation-to-GDP ratio is hovering above 100 per cent level, ringing alarms over expensive valuations. But do not get surprised if the same, called Buffett Indicator because the legendary investor uses it to judge pricey markets, one day touches 200 per cent for Dalal Street.
This may not be a fit-for-all indicator. In the US, the m-cap-to-GDP ratio has hit 200 per cent and in Taiwan, it is screaming at 300 per cent currently.
As per the indicator, stocks are deemed expensive when the value climbs above 100 level. For India, the average 10-year m-cap-to-GDP ratio has stood at 79 per cent, as much of the economy is unlisted and nonformalised.
PMS fund manager Saurabh Mukherjea says investors have figured out that in times of stress the market leader might have 3 months of zero earnings, but the market share gains it makes during the stress period becomes a long lasting one.
Is now a good time to go overweight on financial stocks?
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Last Updated: May 08, 2021, 11:55 AM IST
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Synopsis If you assume that the impact of the lockdown will be limited this time, it does not really impact the fair value of companies.
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Sanjeev Prasad, Managing Director and Co-Head, Kotak Institutional Equities, says his portfolio has a mix of both defensives and cyclicals. If one s portfolio is more towards defensives, then one can take the call of moving towards domestic cyclicals such as financials, capital goods, real estate, etc, he says in an interview with ET Now. Edited excerpts.