India’s Market Boom: NSE Surpasses $5 Trillion Milestone with Record Highs

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This achievement was marked by the Nifty 50 Index hitting an all-time high of 22,993.60 and the Nifty 500 Index reaching 21,505.25, underscoring broad-based growth in the equity market.

Rapid Growth in Market Capitalization

The rise in market capitalization has been swift and impressive. It took 46 months for the market cap to grow from USD 2 trillion in July 2017 to USD 3 trillion in May 2021. The next trillion, reaching USD 4 trillion by December 2023, took only 30 months. Remarkably, the most recent jump to USD 5 trillion occurred in just six months. The top five companies driving this growth are Reliance Industries Limited, TATA Consultancy Services Limited, HDFC Bank Limited, ICICI Bank Limited, and Bharti Airtel Limited.

Over the past decade, the Nifty 50 index has delivered an annualized return of 13.4%. During the same period, assets under management (AUM) by domestic mutual funds surged by 506%, from INR 9.45 trillion in April 2014 to INR 57.26 trillion in April 2024. Similarly, Foreign Portfolio Investors (FPIs) saw their AUM grow by 345%, from INR 16.1 trillion to INR 71.6 trillion.

Broad-Based Market Growth

The growth is not confined to large-cap stocks. The Nifty 100 index constituents now represent 61% of total market capitalization, down from 74.9% in April 2014, indicating a more even distribution of market gains. This broad-based expansion is further evidenced by the increased activity in the primary market, particularly among Small and Medium Enterprises (SMEs), providing alternative funding mechanisms.

Liquidity in the secondary market has also seen significant improvement. The daily average turnover in the equity segment has increased more than fourfold, from INR 17,818 crores in FY15 to INR 81,721 crores in FY24. This surge is attributed to the strategic vision of creating a technology-driven, knowledge-based economy, with strong public finances and a robust financial sector during the Amrit Kaal period.

The NSE has recently launched derivatives on the Nifty Next 50 index, complementing the existing derivatives on the Nifty 50 and Nifty Midcap Select indices. This expansion provides a comprehensive representation of the large and mid-cap segments of the market.

Industry Leaders’ Remarks

Shri Sriram Krishnan, Chief Business Development Officer at NSE, expressed gratitude towards the Indian government, SEBI, and RBI for their supportive regulatory frameworks. He commended all stakeholders for their roles in achieving this milestone. The rapid addition of USD 1 trillion in market cap reflects investors’ confidence in the Indian economy. The NSE remains committed to providing top-tier market infrastructure and facilitating capital formation, ensuring sustained growth and development in India’s financial markets.

This article was originally posted on FX Empire

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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