Sensex wealth creation in seven charts

NEW DELHI: The pan-global ‘vaccine optimism’ and foreign fund inflow (over Rs 1.5 lakh crore since January) continue to push benchmark BSE sensex to new highs, with the index breaching the 47,000-mark on Friday.
The gain came even as the Covid-hit economy entered into technical recession, with the previous quarter GDP growth rate at a negative 7.5%, shrinking exports and retail inflation at close to 7%, which is much above the RBI’s target level of 6%. On Friday, the Nifty on the NSE too closed at a new high of 13,761 points.
But how does sensex’s meteoric risk stack up against other economic indicators? Here’s a snapshot in seven charts:
While the per capita income has seen a steady increase since the 1990s, the economic growth has lost momentum and hasn’t kept pace with the rise of sensex.

Among the global indices, after Nasdaq (86%), sensex with 80% surge has recovered the most since hitting a low in March this year.

Meanwhile, India’s market capitalisation or mcap is now nearing the Rs 200 lakh crore-mark and pulling the country’s mcap-to-GDP ratio near parity.
The market rally over the last few months has pushed the market cap-to-GDP ratio beyond 80 per cent, a marked improvement from the two-year average of 75 per cent.

However, India is still below the global average vis-a-vis mcap-to-GDP ratio.

Cautious sign?
An all-time high price-to-earning (PE) ratio – the measure of how much investors are willing to pay for each rupee of earnings – is a sign to be cautious.

Current PE ratios of global indices:

Well into its 40,000s, sensex is apparently now taking less than 10 sessions to race past each successive 1,000-point mark.

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