Indian equities have been a top performer amongst major emerging markets.

Insight: Valuations look expensive across the board, with the buffet indicator (market capitalization to GDP) in excess territory fueled by the money supply growth. The indicator is at 113 currently (for India), significantly above the 5-year average of 80 but still below the Dec-07 high of 143. On the other hand, the market cap to GDP of the USA stands at 199 vs the long-term average of 144 assuming even a 20% growth in nominal GDP for India (hypothetical scenario), the market cap to GDP would still be expensive at 93 i.e. 113/(1+ nominal growth rate).

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