Record market-cap for BSE companies cheer Indian investors

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Record market-cap for BSE companies cheer Indian investors
The Bombay Stock Exchange (BSE), India’s oldest stock exchange, registered a milestone which has come as a validation of the country’s potential as one of the biggest and fastest growing economies in the post-pandemic era. Courtesy: Getty Images

Market capitalisation at India’s oldest stock exchange hit $3 trillion for the first time, triggered by the fastest $500-billion jump in history.

A milestone for market capitalisation of companies listed on India’s benchmark stock index has come as a strong validation of the country’s potential as one of the biggest and fastest growing economies in the post-pandemic era.

On Monday, the market capitalisation of companies listed on the Bombay Stock Exchange (BSE), India’s oldest stock exchange, hit $3 trillion for the first time – triggered by the fastest $500-billion jump in history.
According to exchange officials, market capitalisation of BSE-listed companies stood at Rs 2,18,94,202 crore ($3 trillion). During the day, the market capitalisation of BSE-listed companies went past the Rs 219 lakh crore or $3 trillion level.

“Market capitalization of equities of listed companies on @bseindia reached $3 trillion intraday for the first time ever,” BSE’s MD and CEO Ashishkumar Chauhan tweeted.

The valuation touched $3 trillion and the time taken for adding the last $500 billion was 159 days — the fastest till now. The only other countries that have a stock market capitalization of more than $3 trillion are the US, China, Hong Kong, Japan, UK, France, and Canada.

The market cap shot up to $2.5 trillion on December 16, 2020. On Monday, the valuation touched $3 trillion, and the time taken for adding the last $500 billion was 159 days — the fastest till now.
The only other countries that have a stock market capitalization of more than $3 trillion are the US, China, Hong Kong, Japan, UK, France, and Canada.

Retail investors call the shots

“Retail investors are the reason that small and midcap companies, including those without solid fundamentals, remain resilient. Trading volumes from retail investors in India have hit a record 45 percent,” said Keval Bhanushali, CEO of Marwadi Shares and Finance Ltd.

For Bhanushali, realty and power “are the most fascinating sectors,” and he told Moneycontrol in an interview that real estate stocks would be the new theme for the decade.

Interestingly, BSE’s record market capitalization comes at a time when foreign institutional investors (FIIs) have been dumping Indian equities - FIIs have sold Indian shares worth nearly $2.48 billion since March 23. But domestic institutional investors, including mutual funds and insurance companies, continue to invest, buoyed by the abundant liquidity and optimism about India’s growth story.

Consumer demand could make a comeback if infection rates continue to climb down from the highs of a few months ago.
Consumer demand could make a comeback if infection rates continue to climb down from the highs of a few months ago. Courtesy: ANI

“As domestic Covid cases fall … helped by the extended lockdowns by major states, sentiments have turned buoyant. Hopes have accelerated that soon restrictions/curbs would be eased once cases decline further,” said Siddharth Khemka, head of retail research, Motilal Oswal Financial Services.

“Visibility on the economic recovery front improved as industrial activities largely continued even during the lockdown, and now, with restrictions likely to ease, consumer demand is expected to make a comeback. Thus, investors are heading more for mid-cap stocks as growing risk appetite, and cheaper valuations of these companies compared to large-cap peers have revived their popularity,” he told mint in an interview.

According to analysts, the Nifty and the Sensex have been consolidating since mid-January, driving liquidity into midcap and small-cap segments. Also, with most large-caps fairly valued, value investors started moving down the market cap pyramid. From their 52-week lows, BSE MidCap has advanced 92%, BSE Smallcap 121% and BSE 500 75%.

The world’s largest bourse in terms of market capitalisation is New York Stock Exchange ($25.62 trillion) followed by Nasdaq ($19.51 trillion), Hong Kong ($6.76 trillion) and Shanghai ($6.56 trillion).

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