In a remarkable surge, the total market capitalization of all BSE-listed stocks reached an all-time high of Rs 328.33 lakh crore, equivalent to $3.94 trillion, by the end of Thursday’s trading session. To attain the coveted $4 trillion milestone, India now needs to add approximately Rs 5 lakh crore to its market cap, with the USD rate held steady at 83.3. This goal could be achieved through sustained growth in the coming days or a single fortuitous trading session triggering bullish sentiment.
While the Nifty has shown a 9% increase in the calendar year, India’s market cap has surged by about Rs 46 lakh crore in 2023, driven by the outperformance of small and midcap stocks and a flurry of IPOs on Dalal Street. India had previously joined the $3 trillion club in May 2021.
On the global stage, India’s stock market holds the fifth position in terms of market value, trailing behind the US ($47 trillion), China ($9.7 trillion), Japan ($5.9 trillion), and Hong Kong ($4.8 trillion). At the macro level, India is presently the fifth-largest economy with a GDP of $3.7 trillion, following the USA, China, Germany, and Japan.
Market experts project India to become a $7 trillion economy by 2030, aligning with estimates. The market cap is expected to mirror GDP growth, doubling when GDP doubles, assuming a market cap to GDP ratio of 100%.
Sunny Agrawal of SBI Securities notes, “India is an under-allocated market globally, with the USA holding about 45% share in the world market cap, while India lags at less than 4%. In the longer term, increased flows from foreign and domestic investors, coupled with new IPOs, will contribute to India’s market cap.”
Looking at the Nifty and Sensex, Dalal Street bulls foresee both indices doubling in the next five years. Market experts, including Mark Mobius and Chris Wood, predict the Sensex reaching the 1 lakh mark within this timeframe.
In the near term, investors keenly await the outcome of state Assembly elections, seen as the semi-final round before the Lok Sabha polls next year. With reduced threats from rising US bond yields, crude oil prices, and the dollar index, the pace of FII selling has slowed, bringing the $4 trillion market cap milestone within reach.
However, achieving the $4 trillion mark in GDP may only be possible in FY25.
