India powers more than a quarter of BRICS market cap

The interesting point to be noted here is that market capitalisation is always linked to the GDP of a country, and it mostly gives an indication of where the economy is heading. For instance, the knee-jerk reaction of the equity market during the pandemic in 2020 was reflected in the next quarter of GDP print. While the Nifty50 plunged 29.3% during the March quarter of 2020, the fall in GDP was reported in the subsequent quarter. The country’s GDP fell 26.3% in the June quarter of that year.

Last week, the combined market capitalisation of all stocks listed on Indian bourses scaled past the $4 trillion mark. The milestone has happened earlier for market cap than for GDP. With the Reserve Bank of India revising the GDP growth estimate for FY24 to 7% from 6.5%, the latter is more likely to hit the magical number in the coming fiscal year. India currently occupies fifth rank in the global market cap rankings, the same position as GDP. Moreover, the country is within striking distance of the Hong Kong Stock Exchange, which is at $4.6 trillion.

The boom in retail trading since the pandemic and continued buying by institutional investors has resulted in an unprecedented rally in Indian equities. While foreign portfolio investors (FPIs) bought equities worth over $16 billion this year on a net basis, the domestic funds have poured in more than $20 billion during the same period.