Market cap to GDP ratio crosses 100% in 2007-08

Indian economy and stock market’s proximity touched a new high during the recent bull-run that climaxed in early 2008. The market capitalisation to GDP ratio, an indicator of stock market development, shot up to more than 100 per cent in 2007-08 from as low as just over 20 per cent in 2002-03, said the SEBI annual report released on Tuesday. The BSE market capitalisation to GDP ratio increased to 109 per cent in 2007-08 from 23.3 per cent in 2002-03. Similarly the NSE market capitalisation to GDP ratio increased from 21.9 per cent in 2002-03 to 103 per cent in the last fiscal. According to the data released by the World Federation of Exchanges, BSE and NSE were ranked 11th and 13th in the world in terms of market capitalisation at the end of March 2008, said the report . The market capitalisation of BSE increased by 44.9 per cent to Rs. 51.38 lakh crore in 2007-08 from Rs. 35.45lakh crore at the end of 2006-07. At NSE also, market capitalisation rose by 44.3 per cent to Rs. 48.58 lakh crore at the end of March 2008 from Rs. 33.67 lakh crore at the end of March 2007. “Indian markets ranked next only to China and Hong Kong in term of volatility on account of concerns over domestic inflation and impending global recession,” the report said. The annualised volatility of the BSE benchmark index Sensex increased to 30.6 per cent in 2007-08 from 27.6 per cent in 2006-07. Similarly, the NSE Nifty recorded annualised volatility of 32.1 per cent in 2007-08 compared to 28.0 per cent in the previous year. Annualised volatility is a measure of the amount by which an underlying index fluctuates. The BSE Sensex touched a high of 21,206.77 on January 10, 2008, and a low of 12,425.52 on April 2, 2007, in 2007-08. The BSE Sensex and NSE Nifty appreciated by 19.7 per cent and 23.9 per cent, respectively, on March 31, over March 31, 2007. Due to heavy fall in early 2008, Sensex gains were limited to 2,572 points at 15,644 on March 31, from 13,072 on March 31, 2007. Among the Indian cities with highest turnover on BSE and NSE were Mumbai, Delhi, Kolkata, Ahmedabad, Chennai, Bangalore, Hyderabad, Baroda, Rajkot, Jaiput and Pune.