War-driven selloff erodes $447 bn India mcap, close to Covid crash

India’s market capitalisation has declined by about $447 billion to $4.7 trillion since the start of the war in West Asia, mirroring in absolute terms the erosion seen during the Covid-19 market meltdown in March 2020.

- SAMIE MODAK

The selloff has been compounded by relatively stretched valuations following the strong rally of the past two years, leaving the market with limited cushion against global shocks.

Developments surrounding the conflict and movements in crude oil prices are expected to remain the key drivers of equity market trends this week.

Benchmark indices had been trading at a premium to most emerging markets. At the start of the month, the Nifty 50 traded at 19.5 times its one-year forward earnings estimates. After the recent market decline, the price-to-earnings (P/E) ratio has fallen to 17.8 times, though it remains higher than most emerging market peers.

Globally, the selloff has been even steeper. World market capitalisation has fallen by more than $8.5 trillion to $148.9 trillion, with the US alone accounting for nearly $2.75 trillion of the decline.