Soaring markets: India on verge of reclaiming fourth spot once again

The value of India’s listed companies hit an all-time high of Rs 400 trillion last week, or wealth enough to distribute around Rs 2.8 lakh to every Indian, and still have some left over. India is on the verge of becoming the fourth-largest market once again after briefly claiming the spot earlier in the year.

Both foreign and domestic money have helped valuations soar, while domestic mutual funds have played a more dominant role in recent times. Systematic investment plans (SIPs), which help funnel investments in a regular way to the stock market have contributed significantly. The last 12 months have seen nearly Rs 2 trillion coming into Indian mutual funds through SIPs. Flows have more than doubled since 2019.

Much of the money has gone to shares of smaller companies. The market capitalisation of small-and-midcap companies accounts for over a third of the total value of the Indian stock market. The small-cap share has been growing at a faster rate.

India accounts for around 4 per cent of the total value of listed stocks globally, as per data from Bloomberg, nearly twice what it was a decade ago.



The government has not capitalised on this in a major way through selling stakes in listed public sector companies, though it continues to tap them for dividends. The government has set a target of Rs 50,000 crore under miscellaneous capital receipts, which includes asset monetisation and other such inflows in addition to potential stake sales. This is lower than the divestment target seen over the last 10 years. Divestment targets, however, are often missed.

Meanwhile, the share of the public sector in India’s total market capitalisation has increased in recent years, though it is still lower than the level in 2013.