Indian mkts commanding high valuations on fgn investors' optimism, trust in India growth story: Buch

Mumbai: Indian capital markets are commanding high valuations as foreign investors are bullish about the country's economic growth on the back of strong domestic macroeconomic data, according to Sebi Chairperson Madhabi Puri Buch.

Speaking at a CII event on corporate governance here on Tuesday, Buch said she meets foreign investors regularly as part of her mandate and has seen an increased interest among them for India, because of the velocity the country's economy has got after years of high-speed growth.

They (foreign investors) are encouraged by data suggesting the strength of the economy as is visible in the growth in GST collections month-on-month, advance tax payouts and power & energy consumption, she said.

According to official figures, GST collections in March grew 11.5 per cent to Rs 1.78 lakh crore on higher domestic sales.

The net direct tax collection grew 19.88 per cent to over Rs 18.90 lakh crore till March 17, on higher advance tax mop-up.

Foreign investors' interest has led to the overall market capitalisation in equities reaching over Rs 378 lakh crore at the end of FY24, from Rs 74 lakh crore a decade ago, Buch said, adding that the market capitalisation is at the level of the overall GDP now.

She said Indian entities raised a total of Rs 10.5 lakh crore from markets by way of equity and bond issuances in FY24, which includes over Rs 8 lakh crore through the bond route.

Speaking about bond issuances, she said it has reached over 62 per cent of the overall bank lending done in a year now.

She further noted that the forward price-to-earnings ratio in the large-caps-focused MSCI India index stood at 22.2 in February 2024, higher than the average of many similar indices around the world. The same was 8.9 for MSCI China, 21.1 for MSCI US, and 11.8 for MSCI emerging markets, according to a chart shared by her.

"Yes, some people say that we are an expensive market but still why is the investment coming? Because this is a reflection of the optimism and the trust and faith that the world has in India today that we are commanding the kind of multiples in our markets," she said.

Large-cap stocks in the MSCI India index have a weightage of about 88 per cent of the total and thus the index predominantly represents large-caps.