Ahead of the Lok Sabha elections results, India has created an incredible wealth of $1 trillion in just 6 months. Doing so, the Indian stock market has achieved a milestone by joining the elite $5 trillion club defying the FII pullout.
India’s total market cap of all the BSE listed companies reached $5 trillion mark or over Rs.414.46 trillion, increasing by $633 billion since the beginning of the year. Even though the SENSEX index is 1.66 percent below its all time high, the BSE index in Small and Medcap have reached new heights.
The M-Cap Journey…
BSE’s total market capitalisation had hit $1 trillion mark back in May 2007. 10 years later, it doubled itself and reached $2 trillion mark on 16th July 2017. Then four years later, it reached $3 trillion mark on 16th May 2021. Roughly two years down the line, on 29th November 2023, it achieved $4 trillion mark. Finally, it took less than 6 months for India to hits $5 trillion mark.
With this achievement, India is now the fifth country in the world to enter the $5 trillion plus elite club. So far, there only four stock markets in this club namely, USA, China, Japan and Hong Kong. With a market valuation of over $55.65 trillion, the US is in first place, followed by Hong Kong ($5.47 trillion), Japan ($6.42 trillion), and China ($9.4 trillion).
Bloomberg reports that as of now in 2024, the market capitalisation of India has increased by around 12 percent, the US by 10 percent, and Hong Kong by 16 percent. The market capitalisation of China and Japan have largely remained stagnant, with China declining by 1.4% and Japan increasing by just 3%.
Future Outlook…
If market returns follow the previous 15–20 years’ pattern and new listings. Then the Indian economy is expected to become the third largest economy by 2027, and its market capitalisation is projected to reach $10 trillion by 2030.
Over past few years the market depth in India has substantially increased and the number of stock with over $1 billion market cap have nearly doubled to 500.
India’s emerging market size makes it an attractive investment destination for large investor. The weightage of India in the MSCI emerging market index is set to increase, potentially attracting around $2.5 billion FII inflows.
According to Jefferies, “Over the next four years, India’s GDP will likely touch $5 trillion, making it the third-largest economy by 2027, overtaking Japan and Germany, being the fastest-growing large economy with the tailwinds of demographics (consistent labour supply), improving institutional strength, and improvement in governance.”