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India overtakes Hong Kong as world’s fourth largest stock market

India’s market cap stood at $4.33 trillion on Tuesday

Published: Tue 23 Jan 2024, 6:01 PM

Updated: Tue 23 Jan 2024, 6:03 PM

By
Issac John

Pedestrians walk past the Bombay Stock Exchange (BSE) building in Mumbai on Tuesday. India's stock market has edged out Hong Kong to become the world's fourth-largest, a milestone that underscores growing global investor optimism about New Delhi's economic prospects. — AFP

Riding a relentless boom, India’s stock market has overtaken Hong Kong’s for the first time to rank as the fourth-biggest equity market globally by market capitalisation. India’s market cap stood at $4.33 trillion on Tuesday as compared to $4.29 trillion for Hong Kong.

Currently, the US is the world’s biggest stock market with a market cap of $50.86 trillion followed by China with $8.44 trillion and Japan at $6.36 trillion.

Siddharth Balachandran, executive chairman and CEO of Dubai-based Buimerc Corporation Ltd, the largest individual shareholder of BSE Ltd, the world’s top stock exchange by the number of listed companies, said India’s enhanced market cap ranking came as no surprise given the nation’s growing appeal as a global investment hub.

“The investment landscape of India has been in an ever-evolving state for the past 15 years. However, the last 3-4 years have been a revelation in terms of the scale and volume of the increase in value. The main reasons for this are the intense pace of holistic digitisation across business sectors and industries, the GDP enhancement along with the disposable income enhancement for a large segment of the population, the steady shift of supply chain of the western world from China to the best available alternative (being India) and the gradual realisation by the different categories of the Indian investor fraternity that wealth building is the fourth basic need of an individual, along with food, clothing and shelter,” Balachandran said.

Siddharth Balachandran, executive chairman and CEO of Dubai-based Buimerc Corporation Ltd, the largest individual shareholder of BSE Ltd.

He said the market cap of BSE Ltd ( as a company listed on NSE) has surged to Rs320 billion from Rs80 billion in 12 months. The market cap of the National Stock Exchange of India Limited (unlisted) is now over Rs2.0 trillion. BSE Ltd, incorporated in 1875 and the first listed stock exchange in India, is the second-largest bourse in India after the NSE Limited.

Balachandran said the total number of registered investors on the Indian stock exchanges reached a staggering 160 million people, from 18 million in 2010. “Investment using regulated platforms such as the stock exchanges is becoming increasingly attractive not only for Indian investors, but also for large multinational foreign investors and institutions. Of course, the icing on the cake is political stability, which ensures that there is no uncertainty, which in turn leads to lesser bouts of adverse volatility, which is always an encouragement for large investors and UHNIs,” said the Dubai based investor, who owns 3.5 per cent of BSE and 0.3 per cent of NSE.

The world’s fifth largest economy’s stock market capitalization crossed $4 trillion for the first time on 5 December, with around half of that coming in the past four years, according to Bloomberg. The growth in the Indian stock market came on the back of a growing retail investor base, persistent inflows from foreign institutional investors (FII), strong corporate earnings, and solid domestic macroeconomic fundamentals. The Indian markets have settled with gains for eight consecutive years and are poised for further growth.

On the other hand, Hong Kong’s Heng Seng has witnessed a record four-year losing streak while the Shanghai Stock Exchange saw its second consecutive year of losses. The negative sentiment toward China and Hong Kong has further deepened this year due to a lack of major economic stimulus measures.

According to analysts, India has positioned itself as an alternative to China, attracting fresh capital from global investors and companies alike, thanks to its stable political setup and a consumption-driven economy that remains among the fastest-growing of major nations.

The total market value of Chinese and Hong Kong stocks have tumbled by more than $6 trillion since their peaks in 2021. New listings have dried up in Hong Kong, with the Asian financial hub losing its status as one of the world’s busiest venues for initial public offerings.

Overseas funds poured more than $21 billion into Indian shares in 2023, helping the country’s benchmark S&P BSE Sensex Index cap an eighth consecutive year of gains.