MumbaiOne hour ago
- copy link
Sensex and Nifty indices have reached all-time highs due to the spectacular gains in the stock market. However, a decline was registered on Friday. Sensex closed 132 points lower at 52,100. Today the total market cap of companies listed on BSE has crossed the record Rs 227 lakh crore. This is more than the GDP of the country, which stood at Rs 195.86 lakh crore in 2020-21.
What is the reason for the rise in the market?
The decline in the rate of corona infection, the falling dollar price and strong quarterly results have kept the stock market bullish. Because the infection rate in the second wave has come down far below its peak. According to the Ministry of Health, if we analyze the data assuming the peak on May 7, then the daily cases of corona have declined by 68%.
Market cap exceeds country’s GDP
Avinash Gorakshakar, Research Director, Profit Mart Securities, said that the market cap of listed companies is better than the country’s GDP. This means that there is a possibility of growth in the economy in the coming days.
He said that when the market cap is less than the GDP, the market is said to be undervalued. Although the market cap is generally higher than GDP in developed countries, but in India, being higher than GDP means that domestic investors as well as foreign investors are showing confidence.
Possible fall in short term, in which stocks to invest?
According to Avinash Gorakshakar, there may be a slight decline in the market in the near term. Because investors will earn profit by selling shares at a higher price. In such a situation, one can invest in infrastructure sector stocks including capital goods, power, steel. Because in the last decade, there has not been much growth in these sectors. But with the advent of the pandemic, business growth is also being seen along with the demand.