Sensex Finishes 100 Points Lower; PNB Plunges 12% As Fraud Gets Deeper

Indian share markets finished the trading session on a negative note snapping a two-day winning streak. At the closing bell, the BSE Sensex closed lower by 99 points and the NSE Nifty finished lower by 28 points. The S&P BSE Mid Cap finished down by 0.5% while S&P BSE Small Cap finished down by 0.3%.

Losses were largely seen in realty stocksbank stocks and PSU stocks.

Asian stock markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 1.07%, while the Shanghai Composite & the Hang Seng fell 1.13% and 0.73% respectively. European markets are mixed. The FTSE 100 is higher by 0.13%, while Germany’s DAX is off 0.15%. Shares in France are unchanged with the CAC 40 at 5,344.35.

Rupee was trading at Rs 64.85 against the US$ in the afternoon session. Oil prices were trading at US$ 63.73 at the time of writing.

The Market cap to GDP ratio for Indian companies too 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.

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 Warren Buffett Indicator Suggests Indian Equity Market Is Overvalued

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 cement sector, ACC Ltd share price (down 1.9%) and Ambuja Cement share price (down 4%) slipped in today’s trade after they announced that “there are currently some constraints to implement a merger”.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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