Indian stock market will explode anytime, like a time bomb: Warren Buffett

The rally in the Indian stock market is not in line with the growth rate of its economy

MUMBAI: The index of Warren Buffett, the world's largest investor, has also given a red light to the Indian stock market. The valuation of the equity market in India is very high in the context of the index valuation indicator of the famous investor Warren Buffett. The boom in the Indian stock market is not in line with the growth rate of its economy as the Indian stock market is becoming a time bomb that could explode at any moment. That's what Buffett believes.

Kohram was seen in the Indian stock market with the advent of the Koro epidemic. The country's stock market plunged amid fears of a recession following the country's downturn. However, from the lower levels, the Indian benchmark indices have seen a spectacular rally to date. Many market experts have expressed concern over this bullion that has been going on for the last one year.

The market share and investment of retail investors is on the rise amid the unilateral rally launched after the lockdown and the boom in the IPO market. Ordinary retail investors are happy with this kind of boom and invest in the stock market to double their earnings, and this temptation is also being questioned.

According to a report released today, the index of Warren Buffett, the world's top investor, has also given a red light to the Indian stock market.

The valuation of the equity market in India is very high in the context of the index valuation indicator of the famous investor Warren Buffett. The index is based on the market capitalization of the country's stock market, i.e. the ratio of market value to the country's gross domestic product (GDP). India's ratio is much higher than the average of the last several years.

Warren Buffett also prefers this index and he once said that this is a very good way to know the level of valuation.

Brokerage firm Motilal Oswal Securities Ltd said it currently has a ratio of 104 per cent, well above the 8 per cent average.

Analysts say this indicates a high valuation of stocks in the country. However, with the economy recovering in the coming months, the ratio could come down and the figure could reach a reasonable level.

The country's GDP growth is improving, but the ratio may remain high due to the unilateral rapid rise in the stock market.

Analysts said delays in the recovery of corporate results and the possibility of a third wave of Corona could be the main reasons for the stock market rally.

The valuation of the stock market declined modestly from the highest level but it is still higher in India than most emerging markets.

Investors' interest in the stock market may have waned due to the reduction in the relief package by the US Federal Reserve, the strength of the dollar, and the recent weak listing of some IPOs.