India’s growing clout as a stock market superpower

In January this year, India’s stock market cemented its position among global peers. It nudged past the Hong Kong Stock Exchange to become the fourth-largest equity market in the world

The combined value of shares listed on Indian exchanges reached $4.33 trillion compared to $4.29 trillion for Hong Kong, according to data compiled by Bloomberg. The top three stock markets are the U.S., China, and Japan.

“India's robust market performance reflects its economic stability, investor-friendly policies, and the growing confidence of market participants,” says CA Rohit Akbari , a Chartered Accountant and Audit Assurance expert.

Read Rohit Akbari’s full post here.?

Economic growth in India is a key driver behind this ascent. The International Monetary Fund (IMF) has raised India’s GDP growth projection for FY24 by 40 basis points (bps) to 6.7%, and for FY25 by 20 bps to 6.5%.

As a result of this, equities in India have been booming. Just in 2023, the Sensex and Nifty gained 17-18% year-on-year, despite economic turbulence, handsomely rewarding investors who parked their money in stocks.

Indian markets have been growing up in a rapid phase compared to the past few years, says Partheeban Ezhil . “The GDP has also seen growth with inflation at manageable levels. The RBI policy tightening seems to stabilise and the government policy making is consistent as well.”

Read Partheeban Ezhil’s full post here.?

The country has also seen a strong inflow of funds from foreign portfolio investors. Foreign equity inflows are estimated at $14billion in 2023, says a Financial Times report.

India’s exchanges are also witnessing a boom in Initial public offerings. The country saw 150 listings in the first nine months of 2023, according to a report by EY .

What is likely to be the impact of India’s stock market boom? “India becomes a more attractive investment destination,” says Sonam Srivastava , CEO at Wright Research. “Its market size will attract bigger global allocations. It will also be a boost to Indian companies as access to capital empowers expansion and innovation.”

However, the financial markets are complex and constantly changing. Analysts warn that stock trading in India this year is going to be characterised by volatility, amid global uncertainty and imminent elections in the country. Equities closed in the red for the fifth-consecutive in the same week it scaled new heights.

Read Sonam Srivastava’s full post here.?

“This is just the first act in a potentially epic play,” says Srivastava. “Whether India becomes a global economic powerhouse or stumbles on its own stage depends on its ability to capitalise on its strengths, address its challenges, and keep innovating.”

Missed the Interim Budget 2024 speech yesterday? Catch the highlights below from NDTV Profit :

?? The same tax slabs and regimes will be maintained, but there is increased focus on making taxpayers' experience smoother.

?? Tax benefits for startups, investments made by sovereign wealth, and pension funds will be extended to March 2025.

?? The outlay for infrastructure has been increased to ?11.11 lakh crore or 3.4% of the GDP.

?? The government will set up a corpus of ?1 lakh crore to back innovation.

?? Long-term interest free loans will be provided to States to develop tourism centres.

?? ?A new scheme will be launched to develop deep tech for defence purposes.

?? The electric vehicle sector will get a boost through greater manufacturing and charging infrastructure. Greater adoption of e-buses will be encouraged.?