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Updated January 23rd, 2024 at 14:38 IST

India surpasses Hong Kong to become the world’s fourth-largest stock market

As of Monday's market close, the combined value of shares listed on Indian exchanges reached $4.33 trillion, outpacing Hong Kong's $4.29 trillion.

Business Desk
Indian stock market growth
Indian stock market growth | Image:BSE, NSE
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India surpasses Hong Kong: India's stock market has surpassed Hong Kong's, solidifying its position as the world's fourth-largest equity market. As of Monday's market close, the combined value of shares listed on Indian exchanges reached $4.33 trillion, outpacing Hong Kong's $4.29 trillion, according to data compiled by Bloomberg. India's stock market capitalisation exceeded $4 trillion for the first time on December 5, with nearly half of this growth occurring in the past four years. This achievement is a testament to India's impressive growth prospects and progressive policy reforms, attracting investors globally.

India's equity market has experienced a robust surge, fueled by a burgeoning retail investor base and strong corporate earnings. The country has emerged as a viable alternative to China, drawing fresh capital from global investors and companies. Its stable political environment and a consumption-driven economy, among the fastest-growing globally, have contributed to this success.

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Ashish Gupta, Chief Investment Officer at Axis Mutual Fund in Mumbai, stated, "India has all the right ingredients in place to set the growth momentum further."

This achievement for India coincides with a historical decline in Hong Kong, home to influential Chinese firms. Beijing's stringent anti-COVID-19 measures, regulatory crackdowns, a property-sector crisis, and geopolitical tensions have eroded China's appeal as a global growth engine. The total market value of Chinese and Hong Kong stocks has plummeted by over $6 trillion since their 2021 peaks, and new listings in Hong Kong have dwindled.

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While some strategists anticipate a turnaround for China, the momentum currently favours India. UBS Group AG sees Chinese stocks outperforming Indian peers in 2024, while Bernstein expects the Chinese market to recover. However, India's momentum remains strong, with its stock benchmarks trading near record-high levels.

Pessimism towards China and Hong Kong has deepened in the new year, with the Hang Seng China Enterprises Index already down about 13 per cent. Meanwhile, India continues to attract foreign funds, with global pension and sovereign wealth managers favouring the South Asian nation, according to a study by the Official Monetary and Financial Institutions Forum.

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In 2023, overseas funds poured over $21 billion into Indian shares, contributing to the S&P BSE Sensex Index's eighth consecutive year of gains. Goldman Sachs Group Inc. strategists, including Guillaume Jaisson and Peter Oppenheimer, noted in a recent survey that there is a clear consensus that "India is the best long-term investment opportunity."

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the global economic trend of India's outperformance and China's underperformance, reflecting in the stock market. While acknowledging the potential for a Chinese comeback, he said that the current trend is likely to continue given the bleak prospects for the Chinese economy and stock market.

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Published January 23rd, 2024 at 13:22 IST

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