BSE-listed companies' valuation crosses $4 trillion for the first time
What's the story
On November 29, the combined market cap of all companies listed on the Bombay Stock Exchange (BSE) hit a record-breaking $4.01 trillion or over Rs. 333 lakh crore.
This impressive milestone comes as Indian stocks continue to soar, with the benchmark Sensex just 2% shy of its all-time high reached on September 15.
Since the start of the year, the market cap has grown by over $600 billion.
Details
Market cap milestones and factors driving the rally
The market cap of BSE-listed firms first reached $1 trillion in May 2007, and it took more than a decade to double that number.
The market cap crossed $2 trillion in July 2017 and $3 trillion in May 2021.
This recent growth in local stocks comes after US 10-year yields dropped to 4.33% and the dollar index hit a three-month low, following comments from US Federal Reserve Governor Christopher Waller about potential interest rate cuts if inflation continues to ease.
What Next?
Positive sentiment boosts and upcoming events
India's stock market is also rallying on the heels of positive upgrades from global brokerages, solid Q2 earnings, and a drop in crude oil prices.
Investors are now eagerly awaiting India's Q2 GDP data and election exit poll results for five states, set to be released on November 30, with final election results due on December 3.
Analysts also point out a consistent decline in Consumer Price Index (CPI) inflation over the past four months.
Insights
Brokerage upgrades and potential risks
Several major financial institutions, including JPMorgan, Morgan Stanley, CLSA, and Nomura, have recently upgraded India to an 'overweight' rating for various reasons.
These include positive seasonality linked to general elections, strong emerging markets nominal GDP growth, and expectations of a deeper bond market lowering risk premiums.
However, analysts warn of potential risks from government policies related to elections, foreign institutional investor selling, and external volatility, which may extend a consolidation phase in the short term.