NEW DELHI: Much ahead of the Indian GDP hitting $4 trillion, the Indian equity market on Wednesday achieved the coveted milestone as the total market capitalisation of all BSE-listed stocks hit an all-time high figure above the Rs 333 lakh crore mark.
Among global markets, the Indian stock market is ranked fifth in terms of market value, behind the US, China, Japan and Hong Kong.
While Nifty is up over 10% so far in the calendar year, India's m-cap has increased by about Rs 51 lakh crore in 2023 led by the outperformance of small and midcap stocks as well as a flood of IPOs on Dalal Street. India had joined the coveted $3 trillion club in May 2021.
After Fed Governor Christopher Waller flagged a possible rate cut in the months ahead, Nifty bulls got another shot in the arm today with the index zooming past the 20,000 mark for the first time since the September peak.
Foreign institutional investors, who were on a selling spree in the last two months of September and October, have now begun to be net buyers of Indian stocks. In November month so far, net FII buying stands at Rs 2,901 crore, shows NSDL data.
Foreign institutional investors, who were on a selling spree in the last two months of September and October, have now begun to be net buyers of Indian stocks. In November month so far, net FII buying stands at Rs 2,901 crore, shows NSDL data.
In the calendar year 2023, FIIs have bought Indian stocks worth about Rs 1 lakh crore while domestic institutional investors (DIIs) have outpaced dollar money by pouring in Rs 177.5 lakh crore.
"For foreign investors, the biggest concern that they have on India is valuations. They do agree with the fundamental story being great, but to the extent to which we have this sort of strong domestic inflows and the domestic investors have been also buying, that is keeping the markets a bit more expensive," said Chetan Ahya of Morgan Stanley.
"For foreign investors, the biggest concern that they have on India is valuations. They do agree with the fundamental story being great, but to the extent to which we have this sort of strong domestic inflows and the domestic investors have been also buying, that is keeping the markets a bit more expensive," said Chetan Ahya of Morgan Stanley.
As India is moving up in the world's economic order, foreign broking firm CLSA expect India's searing GDP growth to propel it to the top three of the globe’s largest economies, from just $3.4 trillion today to larger than Japan’s by 2027, hitting $29 trillion by 2047 and $45 trillion by 2052.
India is expected to overtake Japan in nominal GDP in US dollars by 2027. "China and the US will be the only economies that will be bigger than India by then. Looking beyond, we see the economy expanding from US$3.4tn today to US$29tn in 2047 and $45tn in 2052. If big bang reforms unleash efficiencies, India could overtake the US economy in size by 2052," CLSA said.
As India's GDP keeps inching higher, the market cap is also likely to match steps or even stay ahead. As and when the GDP doubles, the m-cap will also double assuming that the market cap to GDP ratio is 100%.
As India's GDP keeps inching higher, the market cap is also likely to match steps or even stay ahead. As and when the GDP doubles, the m-cap will also double assuming that the market cap to GDP ratio is 100%.
As far as Nifty and Sensex are concerned, Dalal Street bulls see the headline indices doubling in the next 5 years. Both Mark Mobius and Chris Wood, two big India bulls from the overseas market, have predicted that the Sensex will hit the 1 lakh mark in just 5 years.
India upgrades
In recent months, some major global brokerages had upgraded Indian equities to overweight positions. JP Morgan had said last month that investors can use any near term dip as an opportunity to buy and leverage on a positive historical seasonality to Lok Sabha elections.
CLSA had upgraded India to increase India portfolio allocation to 20% above the MSCI benchmark. Nomura had also upgraded the Indian equity market to overweight status saying that valuations may remain expensive.
Back in June, Goldman Sachs had also issued a report saying that it is overweight India given the medium-term growth prospects and had recommended foreign investors build exposure in this emerging market.
(Data: Ritesh Presswala)
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