India's Stock Market Achieves $4 Trillion Market Capitalization

The Indian equity market made history on Wednesday by achieving a significant milestone, with the total market capitalization of all BSE-listed stocks hitting the $4 trillion mark.

Among the top five global markets, the Indian stock market is ranked fifth in terms of market value, following the United States, China, Japan, and Hong Kong.

The surge in midcap and smallcap stocks heightened engagement from retail investors, and the remarkable resilience of the economy collectively played pivotal roles in driving this noteworthy development. The rally in midcap and smallcap stocks, often indicative of increased market dynamism and risk appetite, contributed substantially to the overall market capitalization surge.

The economy's resilience, marked by robust economic indicators and adaptive policies, provided a stable foundation for investor confidence and market expansion.

This increase in positive sentiment can also be attributed to the recent upgrades by international brokerages and robust earnings reports for the second quarter.

The drop in crude oil prices has further contributed to the positive economic outlook by alleviating concerns related to inflation and trade balances. FIIs, previously on a selling streak, have also now reversed course and turned into net buyers of Indian stocks.

“India's correlation of returns with global equities continues to decline and is lower than in history. That said, India is a large stock market in terms of capitalisation in a global context and cannot completely deviate from global equity market trends. Softer global markets could cap absolute returns whereas a strong global bull market could coincide with relative underperformance for low-beta markets like India,” Ridham Desai, MD & Head of Research, Morgan Stanley India, told Business Standard in a report.