Indian Stock Markets Surpass Global Benchmarks in Equity Market Capitalization

Indian stock markets are reaching new highs daily, surpassing global benchmarks. Recently, India reclaimed the title of the fourth-largest global equity market from Hong Kong. The market capitalisation of BSE-listed companies in India soared by 10% to $5.2 trillion, while Hong Kong’s equity market cap dropped by 5.4% to $5.17 trillion.

India’s stock market trades at three times its price-to-book value, compared to Hong Kong’s one time. This surge has attracted global funds, expected to increase further. The NSE benchmark Nifty surged nearly 6% last month and 11.84% over the past six months. Market analysts predict Nifty will reach 25,816 within the next 12 months.

Prabhudas Lilladher experts believe the BJP-led NDA government will continue focusing on growth driven by capital expenditure, particularly in sectors like production-linked incentives (PLI), infrastructure development (roads, ports, aviation, defense, railways), and green energy. This outlook is supported by a 20 bps reduction in the fiscal deficit for FY24, normal monsoon forecasts, and an expected RBI dividend of Rs 2.1 trillion.

Analysts expect the NDA government to increase focus on farmers, the rural and urban poor, and the middle class to mitigate the effects of social engineering and freebies in recent state elections. Retail investors have become key players in this bull market. Experts note that while foreign institutional investors (FIIs) are selling, aggressive buying by domestic institutional investors (DIIs) and retail investors, including high-net-worth individuals (HNIs), is driving the market.