India’s stock market has seen a significant surge in the last six months, adding over $1 trillion to its market capitalization. This growth has propelled the Indian market to become the second largest globally, surpassing China.
The relentless rally has driven frontline indices to record highs and boosted investor participation. Since the beginning of 2024, the combined market capitalization of companies listed on Indian stock exchanges has surged by 24.5%, reaching $5.23 trillion.
This growth is attributed to both rising stock prices and a surge in new listings on the Dalal Street stock exchange. Notably, this increase surpasses the previous record set in 2007, when the market capitalization grew by $1 trillion to $1.81 trillion.
Data indicates a shift in investor sentiment, with a preference for India over China. The majority of inflows are originating from US investors, primarily targeting large-cap funds. Foreign Portfolio Investors (FPIs), who were previously net sellers, have also reversed course, becoming net buyers in recent trading sessions.
Reliance Industries currently holds the top spot for market capitalization at over $245.3 billion, followed by Tata Consultancy Services (TCS) at $167 billion. India now boasts five companies with a market capitalization exceeding $100 billion, including HDFC Bank, Bharti Airtel, and ICICI Bank. These top companies contribute a combined 14.5% to the total market capitalization.
However, some experts express caution regarding the premium valuations of Indian stocks compared to other emerging markets. While the valuations of the Nifty50 are considered more reasonable, broader market valuations are seen as expensive, with a correlation between expensiveness and lower capitalization, quality, and risk.
