NSE/BSE market cap to cross USD 10 trillion by 2030- Experts

In an unprecedented feat, the Indian stock market indices BSE and NSE have entered the exclusive USD 5 trillion club, generating USD 1 trillion in wealth in just six months, despite foreign institutional investors (FIIs) withdrawing funds ahead of the Lok Sabha election results on June 4.

BSE and NSE soared from USD 4 trillion in November 2023 to USD 5 trillion by this week, marking the fastest wealth creation in Indian market history. Data indicates that this surge was driven by domestic institutional investors, retail investors, and high net worth individuals (HNIs), even as FIIs pulled out at least Rs 28,000 crore from the market this month.

Market experts suggest that if current trends continue, and with India projected to become the third-largest economy by 2027, the market cap of BSE and NSE could reach USD 10 trillion by 2030. Ajay Bagga, a market expert, noted that increased scale attracts more investment, initiating a virtuous cycle of growth. He stated, “There is a good chance of both NSE and BSE listed companies’ market cap crossing USD 10 trillion by or before 2030 amid huge growth in FDI and FPI flows on the back of the favourable economy.”

Bagga further predicted that by the end of 2024, the Indian markets might reach USD 5.5 to 5.75 trillion, with key sectors like Financials and IT gaining momentum. He highlighted the potential impact of listing more unlisted companies, noting that India’s 130 Unicorns could significantly boost market cap.

The journey of market capitalization reveals rapid growth: it took 10 years to go from USD 1 trillion to USD 2 trillion, but less than six months to leap from USD 4 trillion to USD 5 trillion. Key milestones in Indian stock market capitalization include:

• USD 1 Trillion: May 2007
• USD 2 Trillion: July 2017 (10 Years)
• USD 3 Trillion: May 2021 (4 Years)
• USD 4 Trillion: November 2023 (2.5 Years)
• USD 5 Trillion: May 2024 (6 Months)

India’s stock market, now the fifth largest globally by market cap, has instilled new confidence in retail investors. Harsha Upadhyaya, CIO – Equity, Kotak Mutual Fund, remarked, “India’s aggregate market capitalization crossing the USD 5 trillion mark is driven primarily by continuing strong economic growth and robust corporate performance. India is now the world’s 4th largest in terms of aggregate market capitalization, signifying the breadth and depth of Indian listed equity space and its long-term potential.”

Comparatively, the US leads with a market cap of almost USD 55.65 trillion, followed by China at USD 9.4 trillion, Japan at USD 6.42 trillion, and Hong Kong at USD 5.47 trillion.

Market predictions are optimistic. Shrikant Chauhan, Head of Equity Research at Kotak Securities, foresees the Nifty index reaching 24,500-25,000 and the Sensex touching 80,000-81,000 by FY26. Despite recent volatility due to election-related speculations, investor confidence has been bolstered by reassurances from Prime Minister Narendra Modi and Home Minister Amit Shah about a comfortable majority for the ruling alliance.

Rajesh Palviya, SVP Research (Head Technical & Derivative) at Axis Securities, is also optimistic, predicting new market heights by the year’s end. “The broader market is showing bullishness, and we believe this rally can extend further. Nifty likely reaches 24,000 in 2024. There is buying interest in most core sectors, and macro data is improving. Corporate earnings are on an upward trajectory, and tax collections are showing a good uptick. Money flow into the equity market is quite encouraging. We expect the Sensex to extend its gains, and we could see the Sensex reach 78,000-79,000 by the end of 2024,” he said.

Experts believe that with a stable government, ongoing reforms, new listings, and rising retail investor participation, Indian markets will continue to reach new heights.