India is the most diverse equity market globally

There are more companies listed and traded on the BSE than in eight other major emerging markets combined

For a prospective global investor, India offers the widest choice of stocks, with more companies listed on its bourses than anywhere else in the world. There are 4,528 companies listed and available for trading on the BSE. By comparison, the two major stock exchanges in the US - the New York Stock Exchange and the Nasdaq - offer 3,689 companies for trade , while the London Stock Exchange (LSE) has 2,689 listed firms.

After India, Japan offers the widest choice, followed by the US and the UK.

Most emerging markets offer relatively limited investment options. There are more companies listed on the BSE than in eight other major emerging markets such as China, Russia, Brazil, Indonesia, Turkey and Mexico combined. The top eight emerging markets, excluding India, together have around 3,700 listed stocks. (OFFERING A WIDE SPREAD)

Besides India and China, most emerging markets have fewer listed stocks, despite large economies. Mexico, a $1.2-trillion economy (60 per cent of India's GDP) has only 168 companies listed on its main bourse in Mexico City. Equity investors in Russia, an economy nearly as big as India, fares better, with 253 stocks listed on that country's main stock exchange in Moscow.

China, the world's second-largest economy, with GDP five times that of India's, has about 1,100 companies listed and traded on its main stock exchange in Shanghai.

This analysis is based on the number of primary securities listed and available for trade at key bourses in the top 16 economies. The sample excludes secondary listing of American depository receipts in the US and global depository receipts on the LSE.

Analysts say a bigger universe reflects the diversity of the Indian economy and the dispersed nature of economic power in the country. It also makes Indian equity markets far more resilient than other emerging markets. "A greater number of players make Indian companies highly competitive and cost-conscious. This also means investors can always find winners, even in bad market conditions," says Dhananjay Sinha, head (institutional equity), Emkay Global Financial Services.

For instance, the domestic automotive sector has been in the grip of a slowdown for three years. But Maruti Suzuki's passenger cars and Eicher Motors' two-wheelers have done well. "A greater number of competitors force companies to focus on niches that may do well even in secular slowdowns," Sinha says.

In the past year, the BSE Mid-cap and Small-Cap indices have outperformed the broader market.

Diversity could be one of the reasons foreign investors remain bullish on India, despite a general risk aversion to emerging-market assets.

Most listed companies in India are small and medium enterprises operating in niche segments, which gives these some protection from a general demand slowdown.

But some point to the pitfalls of having so many small companies listed on bourses.

"The universe gives a wrong picture, as less than 10 per cent of the listed companies are actively traded with meaningful volumes. Most of these companies wee listed in the early 90s, when listing norms were lax. In developed markets, however, only serious companies are listed due to tougher regulatory regime and higher cost of listing and compliance," says Sivarama Krishnan, head (risk advisory), PwC India.

Diversity is a result of India's past economic policies such as small-scale reservations and restrictions on the growth of large enterprises through the Monopolies and Restrictive Trade Practices Act.

A typical BSE-listed company is only 29 years old, with most of the companies incorporated in the 80s and the early 90s.

The diversity of the Indian market is expected to increase further, as many sectors such as internet, insurance, transportation services and power have only a limited presence on bourses, unlike developed markets.