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The stock market on Friday achieved a landmark by crossing Rs 100 lakh crore ($1.66 trillion) in market capitalisation.
The feat was achieved when the benchmark BSE Sensex jumped 383 points, or 1.3 per cent, to a life high of 28,822.37. At the day’s close, however, the value of listed companies was just shy of the Rs 100-lakh crore mark.
A sharp 35 per cent rally in the benchmark indices, coupled with new paper issuance, have helped India cement its position in the league table of top stock markets worldwide. The market cap has soared Rs 29 lakh crore or 42 per cent, the highest worldwide, so far in 2014. The journey from a market cap of Rs 50 lakh crore to 100 lakh crore took around seven years.
“It has taken India and the BSE 140 years to reach this milestone of Rs 100 lakh crore crore market capitalisation. However, given India’s potential, we should be able to achieve multiple times the Rs 100 lakh crore market capitalisation in times to come,” said Ashishkumar Chauhan, the exchange’s managing director.
India is the ninth biggest in the world in terms of market cap, behind Germany which has one of $1.9 trillion.
“If the new government delivers on the economic front then one can see India rise further, as not too many countries are showing growth or investment potential,” Aashish Kamat, chief executive (CEO) at UBS, was quoted as saying on the BSE website.
The total market cap of BSE-listed companies on Friday stood at Rs 99.81 lakh crore, around 90 per cent of the last four quarters’ gross domestic product figure of Rs 110 lakh crore. India’s market cap to GDP ratio is way below its record high of 143 per cent in December, at the peak of the earlier bull market.
Sanjay Kumar Singh, CEO at BNP Paribas Securities India, noted India was only 10 percentage points higher in terms of the 10-year average market cap to GDP ratio of 80 per cent.
“With the GDP widely anticipated to grow consistently over the next few years, on the back of expected reforms and as the economic cycle turns for the better, the market cap is likely to sustain this growth trend,” he said.
The total market cap of the National Stock Exchange (NSE) is slightly less than that of the BSE; the former also has fewer listed companies.
BSE, the largest bourse in Asia, has 5,529 listed companies. However, the top 500 companies alone account for nearly 94 per cent of the country’s market cap.
Analysts believe with GDP expected to grow at a faster pace, India will be able to sustain high valuations.
