INDIA's GDP BEAT JAPAN BUT MARKETS ARE EXPENSIVE SO HERE'S WHAT YOU SHOULD DO

 

Congratulation friends, India has overtaken Japan to become 4th Largest economy in the World!

But hold on to your celebrations. Before you start investing BIG into Indian Equities, better have a close look at the market valuations.

And also question yourself, has India grown so fast to beat Japan or there are different factors in play?
Lets explore.... 

Firstly we need to understand that Japan has been in stagflation for so many years now.

In fact, Japan's GDP is now $4.0 trillion (India is $4.2 trillion) but do you know what was Japan's GDP in 2010?

It was $6 trillion!!

So Japan has NOT GROWN in the last 15 years in true sense (and this is what is called stagflation).

 

MARKET VALUATIONS RIGHT NOW: 

Let’s look at the Stock Markets now and then come back to talk about GDP

 

Today as on 25th May 2025.

India's Market Cap to GDP is 122%

The Peak (in September 2024) was 147.5%

and the 10-year average is 94% (below 100)

 

The Sensex Price to Book Ratio is bound to scare you.

It’s currently at 4.2 whereas the 10 year average is 3.2

 

And another negative data for you.

The Buffet Indicator which compares Market Cap to GDP to estimate expected Market returns is suggesting a very modest expected returns of only 5.9%

 

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SO, WHAT SHOULD YOU AS INVESTOR SHOULD DO???

Firstly, understand the BIGGEST Point in India's favour. 
Its the Demographics!

Japan was seeing a declining youth population, and the stagflation was almost inevitable

Whereas India is youthful and dynamic — nearly 50% of India’s population is below 25 years, and about 65% are under 35 years of age. These young demographic fuels consumption, innovation, and sustained economic growth.

 

Across the World, India is the ONLY Major Economy showing consistent, solid, consistent, strong growth.

This is what every single investor look out for, the VISIBILITY OF EARNINGS, and the country's future growth potential thus boosting confidence amongst investors.

 

Hence while current valuations are bound to create apprehension, any and every correction / dip could be looked at adding more into Equities.

 A more likely scenario could be that there may be a Time correction rather than a price correction. 

But wise investors like you should consider doing more of STPs (Systematic Transfer Plans) into Equities besides the evergreen SIPs

 

Remember,

Opportunities keep coming wearing new disguises and come in new shapes. And most importantly, Markets may pause. But India's story will not!

 Keep your focus on long-term wealth. Stay consistent. Be patient.

 Thank you and all the very best, 

Srikanth Matrubai

AMFI REGISTERED MUTUAL FUND DISTRIBUTOR

REBALANCE VOLATILITY CERTIFIED COACH

Srikanth Matrubai, Author of the Amazon Best Seller DON'T RETIRE RICH

You are strongly encouraged to consult your financial planner before making any decision regarding this investment. The views expressed here are the author's personal views and should not be interpreted as a recommendation to invest/avoid.

 

Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH

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