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Should we brace for a stock market correction?

The Mcap to GDP ratio has reached 104% in FY21, rising way past its long-term average of 78%. Signaling caution for investors

Mudit Kapoor | March 9, 2021 | Updated 13:03 IST
Should we brace for a stock market correction?

Historically, India's Mcap-to-GDP (Buffet indicator) has seen sharp correction once marketcap nears GDP or exceeds it. From the lowest of 42% in past two decades in FY04, it hit a peak of 103% in FY08. But crashed soon after to 55% in FY09. Since then, it has seen corrections in FY11, FY16 and also in FY19. With marketcap at 104% of GDP now, what's in store next?

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