The premium values that India’s domestic equities markets command compared to those of their international counterparts are an indication of the world’s confidence in India.
The price-to-earnings (P/E) multiple that our markets are commanding is higher than the norm for global indices. Even if some claim that our market is pricey, why is investment flowing in? We can command these types of multiples because of the global trust and faith in India.
The benchmark Sensex is currently trading at a trailing 12-month P/E multiple of 23.5x, which is greater than the majority of its global peers and lower than big markets like the US and Japan. India’s “momentum and velocity” are demonstrated by the country’s increasing tax collection figures and profit growth projections.
In just ten years, the market capitalization has increased from Rs 74 trillion to Rs 378 trillion, or one time the GDP. This growth has been astounding. India now makes up 17.6% of the developing market index, up from 6.6% previously. This is the new India’s momentum, the velocity that is talked about. The hockey stick growth pattern is characterized by rapid growth following an extended period of linear growth.
In terms of debt investments, the business is said to have raised Rs 10.5 trillion from the capital market over the previous 12 months. Praising the regulatory and technological changes made over the years, such as the switch to the T+1 (trade plus one day) settlement cycle and the current optional T+0 (same day) settlement cycle, it is noted that India has risen from the back bench of international forums to the forefront, where people now look to it for direction and guidance.