Mar Nev

India Faces a Long Bear Market - Barron's

Sure, the Indian market is overvalued but many of the arguments presented in the Barrons article is specious. For example, "gdp growth of 7.2% implies doubling in ten years". Duh - GDP growth numbers are "real" not "nominal" while market cap number is nominal - given typical 5% inflation rate (average over last decade), that is 12+% growth or doubling in less than six years. Also, comparing market cap to gdp ratio of fast growing, developing country like India with developed and barely growing markets like U.S. and Japan is meaningless - a better approach is to compare it to the same ratio historically for India (less than 50%) to show that 180% is overvalued. Otherwise, I could compare the same numbers for Singapore (200%) or Switzerland (200+%) or HongKong (1000+% at the peak) and argue, as speciously, that 180% is cheap! In any case, I am stunned at the quality of financial journalism seen these days...Barrons, what a rag!