India has outsmarted China in getting its stock market benchmark surge past the 20,000-point milestone, but the domestic stocks are still much cheaper than those in its rival emerging economy, indicating that foreign investors would continue to log onto the bourses in Mumbai.
When compared in terms of the price-to-earnings ratio, the Indian stocks are currently trading at 26.3 times of the earnings, as compared to about 53 times in China, making them much attractively valued than those in the Communist neighbouring nation.
Moreover, the rally in the Indian stocks have been relatively steady. While India's Sensex took nearly 20 months to double from 10,000 level on February 6, 2006, China's stock market's barometer has nearly tripled in 10 months since the beginning of this year.
Sensex is the world's 33rd stock market index to cross the 20,000 level and India is the 20th nation to achieve this feat as a number of markets have more than one of their indices trading above this level.
However, none of the indices in China has so far crossed his milestone and India is the second Asian nation only after Hong Kong to reach this mark.
Among the Brazil, Russia, India and China (BRIC) countries also, China is the only country not to have reached this milestone as both Brazil and Russia have their indices trading above 20,000 points.
In terms of the companies' market capitalisation, China is way ahead of India, the rally on Chinese bourses is making regulators and government of that country wary of a possible bubble.
The sharp rally in Chinese stocks this year has even prompted the country's securities regulator saying that the market holds "great risks".
China Securities Regulatory
Commission's Chairman Shang Fulin said at a Communist Party meeting in October that investors should be more rational as "the higher the share prices, the greater the risk."
Vice Chairman Tu Guangshao said that the regulator must protect investors and prevent market risks.
The Shanghai Composite Index, China's main stock market index, crossed the 6,000-point level for the first time ever when this week long congress meeting was on between October 15-22. "This is less than one-third of the Sensex' current level of over 20,000 level.
However, the market capitalisation of Shanghai-Shenzhen stock market is more than double of the same in India. The cumulative market value of all the listed companies in India currently stands at about $1.6 billion, compared to over $3.5 billion in China.
Besides, five of the world's 10 biggest market cap companies are Chinese, while none of the Indian companies have managed to enter this list. The market cap of the 10 biggest firms is between 200 and $600 billion, India has just one company -- Reliance Industries -- with a market cap of $100 billion.
Five Chinese firms on the top-ten list are China Life, PetroChina, China Mobile, Industrial and Commercial Bank of China China Petroleum and Chemical Corp, although just two of them figure in the top-50 global list in terms of revenue.
The other companies in the top 10 m-cap list led by NYSE-based Exxon Mobil ($511 billion) include General Electric (GE) and Microsoft of the US, Russia's Gazprom and Netherlands' Royal Dutch Shell Plc.
PetroChina has surpassed GE as the second biggest with a market cap of $440 billion, although it is the world's 44th biggest in terms of revenue.
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