StatsGuru: 26-May-2014

Making sense of the numbers beyond the rally on the bourses

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In the past 10 days, and in the past six weeks, the headline indices of the Indian stock market has done considerably better than their emerging-market peers, as Table 1 shows. Some of this may be due to expectations from a new stable government. But, even year-to-date, it has performed more than creditably.

It is worth noting that this relative increase in values is even stronger among small- and mid-cap indices, as Tables 2 and 3 point out. In past years, even when the Sensex has strengthened, blue-chip rallies have not necessarily taken the broader market along with them. This case seems different.

Sectorally, it is worth noting that Indian infrastructure - a cyclical sector - has outperformed its peers in recent times, as Table 4 makes clear. IT stocks, on the other hand, have done worse than in other markets, as Table 5 shows. The performance of banking and finance stocks, in Table 6, is also worthy of note.

On whether the markets are still under- or over-valued, Table 7 shows that blue-chip stocks in India have P-E ratios higher than in most other emerging markets.

Table 8 shows P-E ratios for mid-cap stocks are a little more in line with the benchmarks. Many worry about high P-E ratios for the consumer goods sector in India.

Table 9 shows that such high ratios are not unusual for emerging markets, FMCG in general.