India’s equity market, which accounted for less than a third of the Chinese market about a year ago, has narrowed its gap with those listed on bourses in Mainland China.
Currently, India — the fifth-largest stock market in the world — commands a market capitalisation of $4.35 trillion, which is 50.3% of the Chinese market, according to data sourced from Bloomberg. The combined market capitalisation of stocks listed in China stood at $8.66 trillion as of Monday’s close.
While Chinese stocks saw their market valuation eroding by 34% or $4.4 trillion from their 2021 peak, India has added close to $1 trillion or 29% during the same period. As a result, India now accounts for about 3.9% of the world market against less than 3% commanded at the beginning of April 2023. In contrast, the contribution of Chinese stocks to global equities plunged to 7.8% from 11.5% in July 2022.
| Year-end | India's MCAP as a % of the Chinese market |
| Jan-24 | 50.25 |
| Dec-23 | 44.06 |
| Dec-22 | 32.85 |
| Dec-21 | 26.65 |
| Dec-20 | 23.12 |
(Source: Bloomberg)
The massive erosion in Chinese stocks underscores the challenges that China has been facing to revive falling investor confidence. Global investors are cutting their exposure as the economy is yet to recover from the pandemic slump. Moreover, the latest debacle in the property sector has added fuel to the fire.
On the other hand, the relentless rally in Indian stocks has taken the country’s valuation multiples to sky-high. India is now trading at 20 times forward earnings estimates, up from a year ago, while the ratio for China stands at 9.6 after continued sell-off in the market.
Further, exuberance in the Indian market witnessed as many as 21 companies adding more than ₹1 lakh crore to their market capitalisation over the last year. The list includes blue chips like Reliance Industries, Bharti Airtel, Larsen & Toubro and many others.
Interestingly, seven companies from public sector undertakings (PSU) also featured in the list of companies which added more than ₹1 lakh crore to their market valuation. The names from the PSU basket include — IRFC, LIC of India, NTPC, ONGC, Hindustan Aeronautics, Power Finance Corporation and Coal India.
| Companies which added the most last year | Mcap addition (₹ lakh crore) |
| RIL | 3.08 |
| Bharti Airtel | 2.37 |
| Larsen & Toubro | 2.02 |
| HDFC Bank | 1.96 |
| IRFC | 1.77 |
| LIC of India | 1.75 |
| Tata Motors | 1.57 |
| NTPC | 1.42 |
| ICICI Bank | 1.39 |
| TCS | 1.34 |
| ONGC | 1.31 |
| Adani Ports & SEZ | 1.28 |
While the expectation of robust earnings growth and the economy achieving a growth print of over 7% in the coming years propelled a broad-based rally, policy continuity at the Centre along with ongoing economic reforms further boosted the overall market mood.
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