SPEED BALL!

INDIA’S STOCK MARKETS HAVE INGESTED GENEROUS DOSES OF STEROIDS THE PAST 12 MONTHS, CREATING HUGE WEALTH, AND ALSO DESTROYING SOME. ALERT FOR HOPHEADS: WATCH YOUR HEAD; LIKELY BUMPS AHEAD

- ASHISH RUKHAIYAR

“INVESTING SHOULD BE more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas” —Paul Samuelson, Nobel Prize-winning economist

This widely-quoted line of the 1970 economics Nobel Laureate has been used in various market cycles, and every time it would seem the best line to describe the then market situation. Today, as we publish the much-awaited BT500—the annual ranking of India’s 500 biggest listed companies in terms of market capitalisation (average market cap from October 1, 2020, to September 30, 2021)—the backdrop would seem to challenge Samuelson’s edict.

India’s stock markets have merrily hopped on to a runaway train in recent months. So much so that on an aggregate basis, the market value of the biggest 500 listed companies of India grew 43.4 per cent in 2021. But here’s the reality check. Although the rise is much higher than some recent years, it is still lower than the early 2000s. In 2000, the valuation more than doubled, while 2004 and 2006 saw the cumulative market capitalisation rise 75.5 per cent and 65.7 per cent, respectively. And so, this year’s listing has notable examples of firms that created wealth consistently for investors while also featuring entities that saw a huge and sudden erosion in valuation, which would really make a trip to Vegas look more exciting.

So, let us directly deep-dive into some of the key findings of the 2021 edition of the exhaustive study that Business Today has done every year since 1992.