SEBI Chief Madhabi Puri Buch justifies Indian markets' premium valuation

Indian market regulator SEBI's chairperson Madhabi Puri Buch while speaking at the CII Corporate Governance Summit defended the premium valuations Indian markets enjoy. While acknowledging the higher valuation she mentioned that this is justifiable based on factors like optimism and trust.

SEBI chairperson on market valuation

She also added that while many feel that Indian markets are expensive, that is just a reflection of the trust and faith that India commands globally.

"Why is it that our markets are commanding… this price to earnings multiple which is higher than not only the averages of the world indices but also when compared with various nations,” said Buch while speaking at the CII Corporate Governance Summit.

“At 22.2x, 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 this kind of multiples in our markets,” she added.

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Madhabi Buch also highligted the strong domestic flows especially by retail investors who have been investing directly and indirectly (through mutual funds) in the stock market as an important factor to the resilience of the Indian market.

As per Business Today, Sensex has gained a little over 25% in the last one year while Nasdaq is up around 14% even as the S&P500 moved up a little over 27%. Compared to most of the European and Asian benchmarks, India performed significantly better. In the last one year, Hang Seng shed 17% while Kospi and FTSE have gained only 11% and 4%, respectively.

At the CII summit, Buch also mentioned that going ahead investment products like Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (InvITs) will gain significantly in terms of value and could even be equal to the country’s gross domestic product (GDP)

“We think that going forward, possibly REITs and InvITs together can be in value equal to our entire market the way it is valued today. In other words, one time GDP,” said Buch