After surpassing the Hong Kong stock market in December last year, the Indian stock market currently ranks fourth in the world, with a market capitalization of more than US$4 trillion.
Javier Guersi | Moment | Getty Images
Analysts say India’s market capitalization could easily grow to $40 trillion in the next 20 years, driven by rising investor confidence and strong economic growth.
“We can easily reach $40 trillion by then,” said Sujan Hajra, chief economist at Anand Rathi Share and Stock Brokers, citing the country’s strong economic growth and a “more stable” currency.
Manish Chokhani, director of investment services firm Enam Holdings, is more optimistic, predicting that the Indian market could soar to $60 trillion over the next 20 years.
India’s benchmark Nifty 50 index surged 20% in 2023. After surpassing Hong Kong in December last year, the country’s market currently ranks fourth in the world, with a value of more than US$4.6 trillion. On Monday, the Nifty 50 index and the BSE Sensex surged to fresh closing highs of 22,666 and 74,742 respectively, Refinitiv data showed.
Atul Singh, CEO and managing director of wealth management firm LGT Wealth India, said: “Growth in India’s GDP has led to higher corporate earnings, thereby driving stock market performance.”
Indian Statistics Department It said that the country’s economy will grow by 7.2% in fiscal year 2023 and is expected to grow by 7.6% in fiscal year 2024. The country’s fiscal year begins on April 1 and ends on March 31.
In contrast, Singer noted, China’s economic growth has not led to stock market appreciation in recent years.China’s economy last year Growth 5.2%, in line with the official target of around 5%. However, the CSI 300 Index has fallen for three consecutive years, falling 11.4% last year.
“So the growth in the Indian stock market is driven by real earnings growth…the process of converting nominal GDP growth into earnings growth and stock market returns will remain the same even in the next 20 years,” Singh told CNBC.
Hajra said India also has “new capital pipelines” that can continue to increase market valuations. According to statistics, India will have 220 initial public offerings (IPOs) in 2023, ranking first among all countries. Yi.
“India has the largest number of listed companies in the world, over 6,000, and they like to raise equity early in their life cycle,” Hajra explained.
“Opportunities are everywhere”
After the recent rebound, the Indian market has become more expensive.Benchmark BSE Sensex has a The price-to-earnings ratio is 25.44compared with the average of Shanghai Stock Exchange and Shenzhen Stock Exchange The price-to-earnings ratio is 12.25 and respectively 21.12.
Despite high valuation multiples, analysts say India should remain part of investors’ core allocations.
Sunil Koul, Asia Pacific portfolio strategist at Goldman Sachs, advised investors to focus more on large-cap stocks as he expects a shift in small and mid-cap stocks.
“One of the key points as we enter the year is that you should see a rotation in the market. This is the year of small and mid-cap stocks, and that seems to have changed over the past month,” Cole told us. CNBC’s “Asia Roadmap” last week.
However, LGT Wealth India’s Singh said “opportunities are everywhere”.
He recommends focusing on the financial services industry because “there are some great companies with a lot of long-term growth,” he noted.
About The Author
