Prime Minister Narendra Modi has returned to power for the third time in a row. The formation of this new government has once again created a stir in the stock market. While Sensex and Nifty are touching new highs every day, new records are being created in terms of market capitalization as well. Investors’ enthusiasm for the new government resulted in the stock market capitalization crossing the $5 trillion mark for the first time. According to Bloomberg data, the country’s equity market has joined the ranks of America, China, Japan and Hong Kong.
1 trillion dollar increase in six months
The market capitalization of India’s stock market has increased by $1 trillion in the last six months. Let us tell you that on November 29, 2023, BSE had an index with a market capitalization of $4 trillion. It reached $5 trillion on May 21, 2024. Indian stock market has never seen such rapid growth in its history. It took about 10 years to reach a market cap of $1 trillion to $2 trillion in 2007. While the market cap in the year 2021 was $3 trillion.
What the experts say
Experts say the formation of a new government with a majority of chief ministers largely confirms policy continuity. Goldman Sachs strategist Sunil Kaul said India is a market with exceptionally stable macroeconomics and earnings are expected to continue to rise, which will boost stocks.
In recent years, millions of young Indians have preferred equity investments. Domestic funds, including banks and insurance companies, have bought more than $26 billion worth of shares this year, the data show. At the same time, foreigners have sold about $3.4 billion. After the election results, interest from abroad has started to return, said Chetan Seth, strategist at Nomura Holdings Inc. Foreigners have not been able to acquire significant shares in India due to valuation concerns.