India commanding higher valuations on investors' optimism and trust: Sebi chief Buch

Mumbai: Sebi Chairperson Madhabi Puri Buch on Tuesday said the Indian capital markets are commanding higher valuations because of foreign investors' optimism and trust in the country.

She said at 22.2 in February 2024, the forward price-to-earnings ratio in the large-caps-focused MSCI India index is higher than the average of many similar indices around the world. The same was 8.9 for MSCI China, 21.1 for MSCI US, and 11.8 for MSCI emerging markets, according to a chart shared by her.

"Yes, some people say that we are an expensive market but still why is the investment coming? Because this is a reflection of the optimism and the trust and faith that the world has in India today that we are commanding the kind of multiples in our markets," she said at a CII event on corporate governance here.

Large-cap stocks in the MSCI India index have a weightage of about 88 per cent of the total and thus the index predominantly represents large caps.

Buch said she meets foreign investors regularly as part of her mandate and has seen an increased interest in India among them because of the velocity which the country's economy has got after years of high speed growth.

They are encouraged by data suggesting the strength of the economy as visible in the growth in GST collections month on month, advance tax payouts, power and energy consumption, she said.

The interest has led to the overall market capitalisation in equities reaching over Rs 378 lakh crore at the end of FY24 from Rs 74 lakh crore a decade ago, Buch said, adding that the market capitalisation is at the level of the overall GDP now.

She said Indian entities raised a total of Rs 10.5 lakh crore from markets by way of equity and bond issuances in FY24, which includes over Rs 8 lakh crore through the bond route.

Speaking about the bond issuances, she said it has reached over 62 per cent of the overall bank lending done in a year now.