Sensex, Nifty Trade Marginally Higher; Consumer Durables & Metal Stocks Gain

Indian share markets pared some of its morning gains and were trading marginally higher during the noon session amid firm Asian markets. Gains were largely seen in consumer durables stocks, metal stocks and energy stocks.

The BSE Sensex is trading higher by 75 points and the NSE Nifty is trading up by 31 points. Meanwhile, the BSE Mid Cap index is trading up by 0.7% & the BSE Small Cap index is up by 0.2%. The rupee is trading at 65.05 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.

In news from cryptocurrency, Bitcoin bulls may have just got the technical signal they’ve been hoping for.

The bulls managed to take Bitcoin price up to US$11,660 during Monday hours before the sell-off pushed it back towards US$11,300.

The world’s biggest cryptocurrency by market value rose above its 50-day moving average for the first time since mid-January, up as much as 5.8% on Monday, the most in two weeks.

The rebound comes after a precipitous fall from record highs in December amid debates on how to value the digital coin and threats of regulation. Crossing the key level may raise spirits of investors as they look for anything to spark a renewed rally.