Absence of Profundity in Indian Equity Cause of Concern

Absence of profundity has often been cited as a major concern in the development of Indian equity . The latest analysis offers more proof that despite increasing interest of foreign institutional investors, Indian stock market pursue to be control by a handful of companies with a large market capitalisation. The intermix market capitalisation of the 10 largest companies is one fourth, 28.4 per cent, to be exact, of the total market cap of S&P BSE 500 companies.

Analysis of S&P 500, which encompass maximum US companies, shows that top 10 companies form 17.4 per cent of the market cap of the entire index. Absence of market deepness becomes a major concern in a fatten economy since it tends to enlarge the smash on cost of trades. This is because more funds chase a smaller pool of individual stocks, thus enlarging price volatility.