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How India’s Stock Market Topped $5 Trillion

Daniel Kim Views  

Indian Prime Minister Narendra Modi. AFP-Yonhap News

The Indian stock market’s capitalization has broken through $5 trillion for the first time. It ranks fifth globally in scale, following the United States, China, Japan, and Hong Kong. Analysts believe that the economic reforms are gaining momentum with Prime Minister Narendra Modi’s successful formation of a coalition government after the Indian general elections.

According to Bloomberg News, on the 17th, the market capitalization of companies listed on the Indian stock market exceeded $5 trillion last week. The Indian stock market has grown by about $1 trillion in six months. The Nifty50 Index, a representative index of India, closed at an all-time high of 23,465.60 on the 14th. The Nifty50 has been on an upward trend for the past eight consecutive years, including the top 50 companies (based on free-float market capitalization) listed on the Indian National Stock Exchange (NSE).

The domestic investors led the robust performance of the Indian stock market. According to Bloomberg data, Indian domestic funds such as banks and insurance companies have bought more than $26 billion in domestic stocks this year, while foreign investors have sold $3.4 billion. Bloomberg diagnosed that the investment fever is heating up among India’s younger generation. Bino Pathiparampil, head of research at Elara Capital, evaluated, “Foreign institutional investors, who once wielded dominant influence, are no longer the sole driver of the Indian stock market.”

Expectations that the Indian economy has secured policy stability with Modi’s third term as prime minister are attracting the attention of foreign investors. Chetan Seth, a strategist at Nomura Holdings, said, “There appears to be ample money on the sidelines waiting to be deployed into India from foreign regional funds and India’s dedicated funds.” The ruling party in India, the Bharatiya Janata Party (BJP), has secured sufficient support from alliance forces for the coalition government formation, alleviating concerns over the operation of the government. Recently, S&P Global, a global credit rating agency, upgraded India’s national credit rating outlook, which also works positively. Sunil Koul, a strategist at Goldman Sachs, said, “The formation of the new government with most key ministers retaining their portfolios broadly affirms policy continuity,” and predicted, “India remains a market with exceptionally stable macroeconomics, and earnings growth is expected to continue, driving stocks higher.”

Daniel Kim
content@viewusglobal.com

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