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India’s Stock Market To Overtake UK – Free PDF Download

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What has happened?

  • India’s equity market is on the cusp of overtaking that of the UK in value to join the world’s top-five club, at least by one measure.
  • The likely feat comes as record-low interest rates and a retail-investing boom propel stocks in the former British colony to record highs.

Market capitalization

  • India’s market capitalization has surged 37% this year to $3.46 trillion, according to an index compiled by Bloomberg, representing the combined value of companies with a primary listing there.
  • That’s closing in on the UK, which has seen an increase of about 9% to $3.59 trillion, though the number is much larger if secondary listings and depositary receipts are included.

SENSEX

  • The S&P BSE Sensex — the key index of the Indian bourse BSE Ltd. — has soared more than 130% since its trough in March last year, the most among major national benchmarks tracked by Bloomberg.
  • It has handed investors an annualized return of almost 15% in dollar terms over five years, more than double the 6% for the UK’s benchmark FTSE 100 Index.

Economic growth

  • As the two economies converge in size, India’s higher growth potential and a vibrant technology sector that’s seen a flood of startups going public this year,
  • Are giving the emerging market an edge — especially when sentiment toward Chinese equities has soured.
  • As for the U.K., uncertainties related to Brexit continue to weigh on the market.

  • “India is seen as an attractive domestic stock market with good longer-term growth potential from an immature economy, and a stable and reformist political base is helpful in realizing this potential.“
  • “On the other hand, the UK has been out of favor since the Brexit referendum outcome.”

The journey of $3 trillion

 

 

 

 

  • There was much celebration when the market capitalisation of Indian exchanges crosses the $3 trillion mark this May.
  • In the four months since then, stocks have continued to surge despite lingering concerns about the pandemic and the Damocles sword of US Fed’s monetary tightening hanging over the market;
  • Current market cap is about 15 per cent higher, at $3.47 trillion.
  • A recent global strategy paper by Goldman Sachs however estimates that India’s market cap will increase to $5 trillion by 2024.
  • The writers of the report have based this projections on the slew of IPOs set to hit the domestic market in the coming years.
  • But there are couple of other changes taking place in Indian markets that makes this target achievable, albeit at a later date than that projected.
  • One, a large wave of new investors who are tech savvy and more prone to taking risk are overrunning the older set of more conservative investors.
  • Two, the economy itself is undergoing transformation with most consumer-facing services and products going online, creating growth opportunities for technology firms and businesses.
  • The three factors taken together have brought Indian markets to an inflexion point which can eventually take it towards the $5 trillion milestone.

Q) What is the main cause of the export surplus?

  1. The country’s stringent import policy
  2. Developments in national and international markets
  3. The country’s exports promotion value
  4. None of the above

 

 

 

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