The Indian stock market has now become the 4th largest stock market in the world. India has achieved this position by leaving behind the Hong Kong stock market.
According to data collected by Bloomberg, the total value of shares listed in the Hong Kong stock market is $4.29 trillion, while the total market cap of shares listed in the Indian stock market has reached $4.33 trillion.
The market cap of the Indian stock market had crossed Rs 4 lakh crore on December 5, 2023, half of which has come in the last four years.
Equity market grew rapidly in India
Due to the excellent earnings of corporates and the increasing number of retail investors day by day, the equity market in India is growing at a fast pace. India, the world’s most populous country, has presented itself to the world as an alternative to China. Which is continuously attracting investors from all over the world for new investments, and all this is happening because of its stable political system and consumption economy, which has made it the fastest growing economy.
“All the right ingredients are in place to drive growth in India,” says Ashish Gupta, chief investment officer at Axis Mutual Fund in Mumbai.
Why did Hong Kong lag behind?
On one hand, Hong Kong, where China’s most influential and innovative companies are listed, is facing a historic decline, while on the other hand, the Indian stock market is touching new heights every day. Beijing’s stringent COVID-19 restrictions, regulatory crackdown on corporations, property market crisis and geo-political tensions with the West have all combined to erode China’s appeal as the world’s growth engine.
However, some strategists are hopeful of change. According to a November report, UBS Group believes China’s stock markets will outperform Bharti in 2024, as poor valuations in China suggest there is potential for big upside once sentiment changes, while Valuations in India are very high. According to a note earlier this month, Bernstein expects the Chinese market to return to recovery, and recommends booking profits on Indian stocks, which are very expensive. However, the report says that at present things are looking in favor of India.
Investors turned away from China’s growth story
Economic stimulus measures were expected to be taken in the new year, but this did not happen, due to which the disappointment in China and Hong Kong increased further. The Hang Seng China Enterprises Index in Hong Kong is already down about 13% after halting a four-year record decline in 2023. It is heading towards its lowest level in nearly two decades, while India’s stock benchmarks are trading near record highs.
Foreign investors who were till now impressed by China’s growth story are now transferring their investments to India. According to a recent study by the London-based think-tank Official Monetary and Financial Institutions Forum, global pension and sovereign wealth managers also seem to be favoring India.
Foreign funds have invested more than $21 billion in Indian stocks in 2023, helping the country’s benchmark S&P BSE Sensex index gain for the 8th consecutive year.
There is a clear consensus that India is the best place to invest over the long term, Goldman Sachs strategists including Guillaume Jason and Peter Oppenheimer wrote in a note on January 16 accompanying the results of a survey at the firm’s Global Strategy Conference.
