The average market capitalisation at the BSE in FY16 stood at ` 94.8 bn, about 6.6% lower than in FY15. Likewise, the market capitalisation at the NSE decreased by 6.2% to ` 93.1 bn. Over a five year period, however, both indices reflected a growth of more than 11% per annum between FY12 and FY16, reflecting the rapid growth of the Indian equity markets over the years.
Market Capitalisation (FY12 - FY16)
0 20,000 40,000 60,000 80,000 100,000 120,000
NSE Nifty 50
FY12 FY13 FY14 FY15 FY16
Source: SEBI, Dun & Bradstreet Research
As per data furnished by SEBI, the market capitalisation-to-GDP ratio, which monitors the growth and development of the stock market in tandem with the economy, contracted with respect to the BSE from 96.2% in FY15 to 88.4% in FY16, and with respect to the NSE from 94.1% in FY15 to 86.6% in FY16. Nonetheless, these were much higher than the 70% levels recorded in FY12. The price-to-earnings ratio (P/E ratio), which is an indicator of the valuation of the shares, remained stable till July 2015, but entered a downward spiral thereafter. This was in tandem with the global turmoil that took place. The Sensex and the Nifty both touched their lowest P/E ratio levels in February 2016, before bouncing back in the following month. As on March 31, 2016, the P/E ratio of the Sensex and the Nifty stood at 18.6 and 20.9 times, respectively, as compared to 19.5 and 22.7 times, respectively as on March 31, 2015.
Market Capitalisation to GDP (%)
Price to Earnings Ratio (times)
Source: BSE, NSE, Dun & Bradstreet Research Note: 1. Data for FY12, FY13, FY14 and FY15 revised with consideration to new series estimates for GDP (at 2011-12 prices) 2. For FY16, Advance Estimates of GDP at constant (2011-12 Prices) are considered 3. For FY16, turnover figures pertain to the period Apr 15-Dec 15, and Market capitalisation figures are as on December 31, 2015
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