India's market cap-to-GDP at 100% versus long-term average of 81%

India’s market capitalisation-to-gross domestic product (GDP) ratio has been volatile, reaching 56 per cent of 2019-20 GDP in March 2020, from 80 per cent in 2018-19 and then sharply bouncing back to 112 per cent in 2021-22.

After recent correction, it is now at about 100 per cent of 2022-23 estimated GDP. This is above its long-term average of 81 per cent. The Nifty 12-month forward price-to-earnings (P/E), at 18.7x, is at its long-term average of 18.4x. 

At 2.9x, the 12-month forward price-to-book (P/B) stands at about 8 per cent premium to the Nifty’s historical average of 2.7x. The 12-month trailing P/E for the Nifty is at 22x, 10 per cent higher than its long-term average.

At 3.3x, the 12-month trailing P/B stands at 13 per cent above its historical average of 2.9x.