  Emerging markets such as India provide investors with returns far greater
than those in developed markets; taking the average returns from the period
1995 to 2014 the returns are 4.714% to 3.276% of the developed market. The
majority of emerging markets commenced joining with the capital market of the
world, thus allowing a huge inflow of capital which in turn paved the path for
economic growth. Even though the emerging markets provide high returns these
may also be an indication of a bubble formation. Detection of a bubble is a
tedious task primarily due to the fundamental value of the security being
uncertain, and the randomness of the fundamentals of the market makes detecting
bubbles an arduous task. Ratios that foretold the financial crisis of 2007-
Market Capitalization to GDP, Price to Earnings Ratio, Price to Book Value,
Tobins Q. Data is collected from 1999-2000 from various Indian indices such as
NIFTY 50, NIFTY NEXT 50, NIFTY BANK, NIFTY 500 S and PBSE SENSEX, S and P BSE
100. The paper utilizes the ratios mentioned above to detect and backtrack
various bubble episodes in the Indian market; the methodology used is the
Philips et al 2015 right-tailed unit test. The paper is also inclined to take
steps to mitigate the effects of a bubble by amending the financial policies
and the monetary liquidity of the financial system.
