After the economy, now the capitalization of Indian stock market has also reached fifth place in the world.

Today, India is seen showing the way to many countries of the world in various fields. Recently, the Indian stock market, National Stock Exchange, has crossed the capitalization mark of US$ 4 trillion. Foreign investors and foreign institutions, who were withdrawing money from the Indian stock market till the month of September 2023, are now suddenly investing huge amounts of money in the Indian stock market. Today, many times, more than Rs 5000 crore are being invested in the Indian stock market by these foreign investors in a single day.

The total market capitalization of all the companies listed on the National Stock Exchange (Nifty) has crossed the level of US $ 4 lakh crore or Rs 335 lakh crore. During the last 10 years, the capitalization of these companies has increased at a compounded rate of 17.5 percent per annum. This pace of growth of the Indian stock market is still continuing and the capitalization of companies registered on Nifty has increased by Rs 55 lakh crore (11 percent) during the tenure so far in the calendar year 2023. In the last three months alone, the capitalization of Indian companies on Nifty has increased at the rate of 8.82 percent, which is the fastest increase among the 10 largest stock markets of the world. Today India is contributing 3.61 percent to the world stock market capitalization which was 3.37 percent in January 2023.

The level of total market capitalization of all the companies listed on the National Stock Exchange reached the level of 2 trillion US dollars in July 2017 and after about 4 years i.e. in May 2021, it crossed the level of 3 trillion US dollars and only about After 2.5 years i.e. in December 2023, it has also crossed the level of 4 trillion US dollars. Today India has come to fifth place in the world in terms of stock market capitalization.

In the first place is the American stock market, whose capitalization is more than 47.78 trillion US dollars. The contribution of the US stock market to the entire world, in terms of share capitalization, is 44.74 percent and the US stock market capitalization is 188 percent of the US GDP. At second place is China’s stock market whose capitalization is more than 9.73 trillion US dollars. This year 2023, China’s stock market has given negative returns to its investors. The contribution of China’s stock market to the entire world is 9.12 percent and the capitalization of China’s stock market is only 54 percent of China’s GDP. In third place is Japan’s stock market whose capitalization is more than 6.02 trillion US dollars. The contribution of Japan’s stock market to the entire world is 5.64 percent and the capitalization of Japan’s stock market is 142 percent of Japan’s GDP. In fourth place is Hong Kong’s stock market, whose capitalization is more than 4.78 trillion US dollars. The contribution of Hong Kong’s stock market to the entire world market is 4.48 percent and the capitalization of Hong Kong’s stock market is 1329 percent of Hong Kong’s GDP. Whereas India has overtaken the stock markets of France and Britain and has come to fifth place. Today the capitalization of India’s stock market is more than US$ 4.10 trillion. The contribution of India’s stock market to the entire world is 3.61 percent and the capitalization of Indian stock market is 114 percent of India’s GDP. With the fast pace at which the capitalization of the Indian stock market is progressing, it is now expected that soon the capitalization of the Indian stock market will overtake the capitalization of the Hong Kong stock market and come to fourth place in the world.

The Central Government is often accused by the opposition parties that government undertakings are being abolished in India. Whereas during the last 27 months, the capitalization of government undertakings has doubled in the stock market to Rs 46.40 lakh crore. Public sector undertakings have recorded incomparable growth in their market capitalization during this period. The Sensex of Bombay Stock Exchange has crossed the level of 60,000 to 70,000 in the last 27 months. There has been a huge improvement in the corporate governance of these PSUs, due to which the confidence of not only foreign investors but also Indian institutional investors and retail investors on these PSUs has increased.

Due to various reform programs being continuously implemented by the Central Government in the economic sector, foreign institutional investors, foreign retail investors and citizens of Indian origin living abroad are also investing in large quantities in Indian companies through the stock market. However, in recent times, there has been an incomparable increase in the profitability of Indian companies, due to which various financial ratios of these companies have become very attractive. Whereas stock markets like China, Hong Kong, Germany, Japan are able to give negative or very low returns to their investors. Many foreign institutional investors are withdrawing their capital from countries like China, Hong Kong etc. and investing in the Indian stock market. There is a strong possibility that the growth rate in the Indian stock market will remain attractive in the future also.

It is said that an investor invests his savings in the stock market very thoughtfully and when investors start to realize that the future of a particular company is very bright and the return on the investment made by the investor is likely to be maximum, Only then investors invest their savings in that particular company in the stock market. Thus, when investors’ confidence in the economy of any country appears to be increasing, especially foreign investors and foreign investor institutions increase their investments in the shares of various companies in that country. Since foreign institutions have full confidence in the Indian economy and the growth journey of Indian companies in the times to come, investment in the Indian stock market is also gaining momentum.

-Prahlad Sabnani

Retired Deputy General Manager

state Bank of India