Capital cover drive: India's $100 billion knock evens score with China

Its capitalisation leapfrog surpasses South Korea and Taiwan, establishing dominance in EM pitch

The depth and size of Indian markets have significantly increased since the pandemic, boding well for their ability to attract and absorb global capital flows.

India now boasts 100 stocks with a market capitalisation (mcap) above $10 billion, nearly on a par with China, which has 124 largecap members of the CSI 300 Index.

The number of stocks with a capitalisation of over $10 billion in India is about 4-5 times higher than in South Korea and Taiwan, underscoring the rising heft of India among emerging markets (EMs).

Prior to the onset of the pandemic in 2019, India had only 30 stocks with mcap above $10 billion, a figure largely in line with other EMs, except for China.

India’s count has more than trebled since the pandemic, marking the largest expansion among EMs.

The capitalisation-weighted National Stock Exchange Nifty 500 Index has had a price-to-earnings ratio of 26x, 0.7 standard deviations above the mean, since 2004.

Indian equities appear poised to capture a larger share of foreign portfolio allocations, buoyed by a doubling of the country’s weight in the Morgan Stanley Capital International EMs Index, rising to 18 per cent from 8 per cent four years ago.