How soon can India get to $5 trn mcap? Between 2025-2031, says Elara

With India’s market capitalisation recently topping the $3-trillion mark, investors have set their eyes on $5 trillion. So how soon can India get there? In a note Elara Securities says anywhere between 2025 and 2031 depending on how the economic growth and valuations pan out.

“If we assume 11 per cent annualized growth in the GDP in rupee terms (8 per cent in US dollar terms) and a market cap-to-GDP ratio of 1.3 times, India could attain a $5 trillion market cap by 2026, which is the best case scenario. If the rupee were to remain stable at the current exchange rate, the timeline would accelerate by a year, i.e. 2025,” the brokerage said in a note.

Elara says listings of new-age tech companies could be a big driver. Also, it believes there is further scope for valuation expansion.

“India equities market is significantly underrepresented in the new-age tech sector. Currently, it is dominated by financials, which forms one-fourth of the total market. IPOs from new-age tech firms, disruptors and other big players would be big contributors to market cap growth. In line with market share consolidation seen globally, we expect disruptors in India to see the same, further supporting market cap-GDP premium expansion,” said analysts led by Shiv Chanani of Elara.