After hitting the Rs 300 lakh crore mark on 5 July 2023, India’s m-cap ended Monday’s session at Rs 394 lakh crore and is now just one lucky trading day away from hitting the magical figure. The fast-paced rally is driven by a handsome 15% surge in Nifty and hundreds of small and midcap stocks giving multibagger returns.
The nearly Rs 100 lakh crore gain in the last 8 months also includes the impact of any new listings like IPO, FPO or any other form of equity fundraising but most of the gains have been led by the sheer rise in share prices. On the other hand, delistings reduce the market cap.
India’s market cap crossed the Rs 50 lakh crore mark in 2007, Rs 100 lakh crore milestone in 2014, and the Rs 200 lakh crore-mark in February 2021.
In terms of wealth creation, the ongoing bull run is unprecedented in India’s history.
In USD terms, India’s m-cap is inching closer towards the $5 trillion mark and was last at $4.8 trillion level.Also read | How India’s market capitalisation skyrocketed 30 times in 20 years
What’s next for India stock market?
In the near term, there may be little juice left as bear calls warning of overvaluations have been rising with each passing day. But if you stretch the time horizon, the stock rally is seen as doubling by 2030.
“Assuming market returns in line with the last 15-20 year history and new listings, India will become nearly a U$10 trillion market by 2030 – impossible for large global investors to ignore,” said Mahesh Nandurkar of Jefferies.
Three major factors are expected to drive equity inflows:
1) Household savings – Even after the surge in retail investor interest in equities, India’s household savings in stock market is just about 5%. With growing awareness around investment through mutual funds by regulators and the Finance Ministry, Jefferies expects to see much more savings flowing into India’s equity markets.
2) FII flow – Analysts point out that even though India is 4th largest in terms of market cap, its ranking in the Bloomberg World Index is 8th with a weight of just 2%. There is tremendous scope for foreign investors to increase investment into the fastest growing country in the world, Jefferies said.
India’s weightage in MSCI EM index has doubled in the last four years.
3) New listings – India is home to 111 unicorns which together command a valuation of around $350 billion. Some large unicorns like Flipkart, Swiggy, Ola Electric and PhonePe can be listed in the near term, adding to India’s market cap.
NSE MD and CEO Ashish Chauhan has even gone on to predict that the non-stop market rally will give India a market cap of $50 trillion by 2047 led by tech startups.
Also read | India vs China battle in MSCI EM intensifies as elephant’s weight doubles in 4 years, dragon weakens
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)