Comparison of market cap to bank deposits: SMC Capitals
Published on Tue, Oct 06, 2009 at 09:01 , Updated at Tue, Oct 06, 2009 at 10:42
Source : Moneycontrol.com
SMC Capitals has come out with a report on comparison of market cap levels with the aggregate bank
deposits in the banking system. According to report, the relative measure of "the entire market
capitalization of BSE as % of aggregate bank deposits in the entire banking system" reflects the level of
risk appetite in the investor community.
The elements of fear and greed (which drive the capital markets), are clearly visible in the trends of
allocation of assets by the investors in terms of cash and stocks. This can be seen in the levels of market
cap and the levels of bank deposits in the economy. When there is fear, the bank deposit levels go up.
And, when there is optimism, the market cap levels go up.
In this background, here we have made a small attempt to compare the BSE market cap levels (over the
period starting January 2007), with the aggregate bank deposits in the banking system. The relative
measure of "the entire market capitalization of BSE as % of aggregate bank deposits in the entire banking
system" reflects the level of risk appetite in the investor community.
For instance, in January 2007, the BSE market cap as % of aggregate bank deposits is at the level of
152%, which means BSE market cap is 1.52 times more than the entire bank deposits.