Indian Stock Market Achieves Record $4 Trillion Market Cap Milestone; Outpacing GDP Growth

In a significant economic feat, the Indian equity market soared to a historic high, surpassing the $4 trillion market capitalization mark for the first time. The total market cap of all BSE-listed stocks exceeded Rs 333 lakh crore, outpacing the growth of the Indian Gross Domestic Product (GDP).

Currently ranked fifth globally in market value, the Indian stock market trails behind only the United States, China, Japan, and Hong Kong. The bullish trend has been attributed to a 10% surge in the Nifty in the calendar year and a substantial increase of about Rs 51 lakh crore in India's market cap in 2023. The stellar performance is propelled by the outperformance of small and midcap stocks, coupled with a surge in Initial Public Offerings (IPOs) on Dalal Street.

Foreign institutional investors (FIIs), who were net sellers in September and October, have reversed their stance, becoming net buyers in November with a net FII buying of Rs 2,901 crore, as per NSDL data. In 2023, FIIs have purchased Indian stocks worth about Rs 1 lakh crore, while domestic institutional investors (DIIs) have poured in Rs 177.5 lakh crore.

As India continues its ascent in the global economic order, foreign broking firm CLSA predicts that India's robust GDP growth could propel it to become one of the world's top three economies by 2027, surpassing Japan. The GDP is expected to reach $29 trillion by 2047 and $45 trillion by 2052.

The positive economic outlook has led major global brokerages to upgrade Indian equities. CLSA, JP Morgan, Nomura, and Goldman Sachs have all recently upgraded their positions on Indian stocks, citing strong growth prospects and positive seasonality.

Market analysts on Dalal Street anticipate the Nifty and Sensex to double in the next five years, with predictions by overseas market experts like Mark Mobius and Chris Wood suggesting that the Sensex could reach the 1 lakh mark within this timeframe.

With corporate upgrades and a 32% increase in India Inc.'s aggregate earnings in the July to September quarter, market experts like Raamdeo Agrawal are optimistic about India's economic trajectory. Agrawal recently stated, "India is on a roll. The index can double in the next five years from here on, and surge 4x in 10 years."

As India's GDP continues to climb, the market cap is expected to mirror this growth, maintaining pace or even outpacing it. If predictions hold, the market cap will double with every doubling of the GDP, assuming a market cap to GDP ratio of 100%.

Source: The Economic Times