India Approaches $4 Trillion Market Cap, Joining US, China, Japan, HK


India'sIndia's stock market is on the cusp of a historic milestone, nearing a remarkable valuation of nearly $4 trillion, securing its position as the world's fifth-largest market. This incredible surge has been driven by a substantial rise in retail investors and renewed foreign investments. Since hitting a low point during the pandemic in March 2020, the combined market worth of listed securities on Indian exchanges has tripled, reaching a staggering $3.93 trillion. Following the recent victory of Prime Minister Narendra Modi's ruling party in three crucial state elections, the benchmark index recorded a 1.7% increase in trading, surpassing other Asian markets. This electoral success has reduced political uncertainties for investors in anticipation of next year's nationwide elections, signifying a continuation of government policies.

India's stock market growth is a significant achievement, propelled by its status as the world's fastest-growing major economy. Additionally, it has emerged as an appealing alternative to China for both global investors and corporations. In 2023, foreign investments have exceeded $14 billion in Indian shares, capitalizing on the surge in retail investments that gained momentum during the pandemic. The Nifty gauge, showing an increase of nearly 14% this year, is on track to achieve an unprecedented eighth consecutive year of growth.

India’s economy shines amidst a global growth slowdown, experiencing a significant 7.6% increase in gross domestic product (GDP) in the three months leading to September compared to the previous year. This growth trajectory gains further attraction due to China's sluggish recovery post-pandemic and its strained relations with Western nations. Similarly, Indian stocks demonstrate robust performance, with the MSCI Inc. gauge of local shares set to surpass a global emerging-markets measure by more than 10 percentage points for the third consecutive year. Moreover, the Indian gauge is projected to outperform the MSCI China Index by over 20 percentage points for the third consecutive year as well.

India's young population and Prime Minister Modi's initiatives to attract a larger share of global supply chains have enticed multinational corporations like Apple Inc. to invest in the country. Simultaneously, a recent study conducted by the London-based Official Monetary and Financial Institutions Forum indicates a growing interest among global pension and sovereign wealth managers towards India, while displaying hesitancy regarding investments in China. JPMorgan Chase & Co. strategists, led by Rajiv Batra, highlighted that apart from the long-term structural potential, several immediate factors are expected to propel the markets upward. These factors include robust activity data, impressive corporate earnings, decreasing oil prices, and strong domestic inflows.