The
Indian stock market
has achieved a remarkable feat by generating $1 trillion in wealth within a span of 6 months. On Tuesday, it entered the prestigious $5 trillion club for the first time, despite facing FII pullout ahead of the Lok Sabha election results on June 4.
According to an ET report, the total market value of all stocks listed on the
Bombay Stock Exchange
increased to Rs 414.75 lakh crore on Tuesday.
Investors continued to buy stocks in the overall market while the Nifty and Sensex indices were uncertain after the previous week’s strong performance.
The journey of
Dalal Street
from $4 trillion on 29 November 2023 to $5 trillion on May 21 was completed in less than six months. The speed at which this wealth has been created is unprecedented in the market’s history.
Nifty is currently approximately 250 points below its all-time high, while mid and small-cap indices reached new peaks in the session on Tuesday.
The current phase of the bull market is driven by domestic institutional, retail, and HNI investors, as Foreign Institutional Investors (FIIs) have withdrawn at least Rs 28,000 crore from Dalal Street this month.
Market experts are saying that the next big triggers for the
BSE Sensex
and
Nifty50
will be the Lok Sabha poll results in June and the subsequent full year Budget. Additionally, the prospects of an imminent US Federal Reserve rate cut may also drive market sentiment, feel analysts.
India is a significant player in the global stock market, securing the fifth position behind Hong Kong, Japan, China, and the United States. The country’s stock
market capitalization
reached $1 trillion for the first time on May 28, 2007, and it took another decade to reach the $2 trillion mark on May 16, 2017. The growth accelerated further, with the market hitting $3 trillion in just four years on May 24, 2021, the ET report said.
Projections indicate that India is on track to become the third-largest economy by 2027, and its market capitalization is expected to reach $10 trillion by 2030, assuming market returns remain consistent with the past 15-20 years and new listings continue to emerge.
This growth has made India an attractive destination for emerging market investors worldwide, and the increasing market size will make it difficult for large investors to overlook, while also providing ample liquidity for significant players.
The market depth in India has witnessed substantial growth in recent years, with the number of stocks having a market capitalization of $1 billion nearly doubling to 500. Moreover, India has consistently delivered annualized returns exceeding 10% over the past 5, 10, 15, and 20 years, making it a standout performer among major emerging market economies.
“Over the next 4 years, India’s GDP will likely touch US$5trn making it the 3rd 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,” according to Jefferies.
Furthermore, India’s weightage in the prestigious MSCI Emerging Markets (EM) index is set to increase from 18.3% to around 19% from May 31, potentially leading to foreign institutional investor (FII) inflows of approximately $2.5 billion.
