GR Exclusive: Indian Stocks Are Investors Darling; After 4th Largest Equity Market Title, What's Next Big Spot

The global market faced panic of bears and optimism of bulls together amidst the latest uncertainties. In the past four years, a series of events right from the lethal COVID-19 pandemic, and supply-chain constraints, to geopolitical tensions including Russia and conflict in the Middle East. However, not every market performed parallelly, there have been ups and downs and alternatives of both bears and bulls. In the Indian stock market's case, it turned out to be an investor darling, a sweet haven for hedging fruitful gains.

Take note, that the Indian market has given impressive gains. So much so, that it surpassed China's Hong Kong shares market. India is now the fourth largest market globally, and it has only just started, there are more ladders to climb.

And considering India's economic prospects and policy reforms make it well-poised to take on China as a whole in terms of stock market performance. That being said, India can hit the top 3 ranks of the global market. It has the potential!

The latest data from Bloomberg revealed that the combined value of shares listed on Indian exchanges touched $4.33 trillion as of January 22, 2024, surpassing Hong Kong's combined market value of $4.29 trillion. This makes India the fourth-largest equity market in the world of equities.

In the initial trading sessions of 2024, Indian benchmarks Sensex and Nifty touched their last lifetime high of 73,427.59 and 22,124.15 in the initial days of 2024, after a long-monthly bullish trend in December 2023. Despite a few hiccups this week, Sensex and Nifty's yearly performance is in the range of 16-18% upside.

Palka Arora Chopra, Director, Master Capital Services said, that on January 22, India overtook Hong Kong to take the fourth spot in the world's stock market rankings by market capitalization. On Tuesday, Hong Kong's market capitalization was $4.29 trillion, while India's was $4.33 trillion."

Explaining why it was possible for the Indian market to outrun Hong Kong, Chopra said, "A rapidly expanding retail investor base, consistent inflows from foreign institutional investors (FII), robust corporate profitability, and bullish investor sentiments drove Indian equities to new highs. Investor confidence has increased due to the anticipated rate reduction by international central banks in 2024, which has further fueled the surge in the Indian market."

In regards to why Hong Kong shares have been under pressure, Dr V K Vijayakumar, Chief Investment Strategist, at Geojit Financial Services said, "A significant trend in global economic growth now is the underperformance of China and the outperformance of India. This is getting reflected in the stock market. Since the important Chinese stocks listed in Hong Kong have crashed, the Hang Seng index is near a 19-year low. This trend is likely to continue since the prospects for the Chinese economy and stock market appear bleak for now."

However, Nair added, if the Chinese economy stages a comeback the Chinese stocks will bounce back since their valuations are very low.

But chances are the Indian market will already be hitting new highs by the time Chinese valuations improve.

Chopra said, the positive macroeconomic conditions, predictions of interest rate decreases, and optimistic attitude before the election, have helped the Indian equities markets see gains for eight years running and are expected to continue growing. Investor confidence has increased following the National Democratic Alliance (NDA) led by Narendra Modi's recent victories in several state elections, indicating continuity as India prepares for central government elections in April 2024.

Further, Chopra said, "It is anticipated that the ongoing policies and initiatives will push India's economy closer to the coveted Rs 5 trillion level if the BJP wins a third consecutive term in office. India has positioned itself as an alternative to China, attracting fresh capital from global investors and companies alike The economic slowdown in China and the pressure on American investors to reduce their exposure to Chinese companies are causing the Hong Kong markets to decline."

Indian market's valuation crossed the $4 trillion mark for the first time on December 5, 2023. Half of this mark was achieved in the past four years, making it a beacon of success after the pandemic.