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SEBI Chairperson Madhabi Puri Buch said that the high price to earning ratio of Indian markets is a sign of investor optimism and trust. She was talking at the CII 17th Corporate Governance Summit in Mumbai on Tuesday.
Buch said, “Our markets are commanding this price to earnings multiple which is higher than the averages of the world indices. Some people say that we are an expensive market but still why is the investment coming? Because this is a reflection of the optimism, trust and faith that the world has in India today that we are commanding these kinds of multiples in our markets.”
She also talked about the hockey stick effect taking place in the Indian economy. The hockey stick effect is the phenomenon of a long period of flatness followed by sharp growth. She said, “We talk about the hockey stick effect at an enterprise level. What we are witnessing is the hockey stick phenomena at an economy level, a market-wide level, at an ecosystem level. The market cap has gone from Rs. 74 lakh crore to Rs. 378 lakh crore, we are at one-time GDP now. The growth has been phenomenal in just 10 years. You look at India's weight in the emerging market index: we started at 6.6, we are today at 17.6. This is the velocity that we speak about, this is the momentum of India."
