Indian share markets turned lower after rising in the morning hours. PSU stocks and automobile stocks are witnessing majority of the selling activity. Meanwhile, software stocks are trading in green.

The BSE Sensex is trading lower by 78 points and the NSE Nifty is trading down by 28 points. Meanwhile, the BSE Mid Cap index is trading down by 0.8% & the BSE Small Cap index is down by 1%. The rupee is trading at 63.92 to the US$.

The Market cap to GDP ratio for Indian companies is close to dangerously high levels. While this is still some way off the peak of FY-08, when it had once reached close to 150, it’s relatively high.

The Warren Buffett Indicator Suggests Indian Equity Market Is Overvalued

FY17 saw this ratio reach close to 80. It is also expected to increase further given the moderate growth expectations in India’s GDP for FY18. Warren Buffett once considered this as one of the best valuation metrics to gauge the markets.

Past history shows some correlation between the ratio and the share market. 2008 saw Sensex decline by 38%, when this ratio crossed the 100 mark. Also, the market has bounced back sharply when this ratio was low.

The basic assumption in this ratio is that whenever the GDP of the country grows, the market performance will reflect it. Also, when stocks do well, it can be extrapolated to assume the Indian economy is doing well.

In news from automobile sector, as per an article in The Livemint, Mahindra & Mahindra (M&M) on Friday said it will invest up to Rs 1.76 billion in car and bicycle rental firm Zoomcar India or Zoomcar Inc., its US incorporated holding parent company.

Mahindra said the company has been keen to invest in the shared mobility space as part of its strategy to participate in sustainable mobility solutions.

In November last year, Mahindra and Zoomcar announced a partnership to introduce electric vehicles in the shared mobility space.