India, ranked fifth globally by market capitalisation, witnessed a significant 13.8% increase in dollar terms during the June quarter, marking the highest surge among the top 10 markets worldwide.
According to data from Bloomberg, this marks the fifth consecutive quarter of growth for India's market, which currently stands at a valuation of $5.03 trillion.
In contrast, the United States, the world's largest equity market valued at $56.84 trillion, saw a more modest overall expansion of 2.75% over the same period.
Meanwhile, China, the second-largest global equity market, experienced a notable decline of 5.6% in market capitalisation, falling to $8.6 trillion. This decline also represents the fifth consecutive quarter of shrinking market capitalisation for China.
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Japan, with an equity market capitalisation of $6.31 trillion, experienced a decline of 6.24% in the June quarter. In contrast, Hong Kong, slightly ahead of India with a market capitalisation of $5.15 trillion, saw its valuation grow by 7.3% over the same period.
Meanwhile, the United Kingdom recorded a 3.3% increase in market valuation, while France saw a notable decline of 7.63%. Canada and Saudi Arabia also saw declines of 2.7% and 8.7%, respectively, while Taiwan experienced a robust expansion of 11%.
Notably, India's market valuation surged by 26.17% in 2023, driven by a rally in local equities supported by strong inflows from domestic and foreign investors, attracted by improving macroeconomic fundamentals.
Ajay Bagga, a market expert, attributes the current strength of the Indian markets to a sustained macroeconomic expansion spanning multiple years. He points to premium valuations driven by rising corporate profits, especially as banks have resolved their bad debt issues and corporates have progressively reduced their leverage in recent years. Additionally, the Indian rupee's outperformance against other emerging market currencies has bolstered investor sentiment.
In June, India's benchmark indices, Sensex and Nifty, have surged by nearly 7%, continuing their upward trend for the quarter with gains exceeding 7.3%.
Meanwhile, the BSE MidCap and BSE SmallCap indices have demonstrated even stronger performance, recording gains of 7.2% and 10.8% respectively in June. Over the quarter, these indices have surged by 17% and 21%, underscoring robust market sentiment across mid and small-cap segments.
Looking ahead, analysts anticipate sustained positive momentum into July, buoyed by optimism surrounding an anticipated reformative budget aimed at stimulating economic growth. Both domestic and foreign investor participation is expected to bolster this trend, with ongoing expectations of a potential rate cut in the latter half of the year likely to further attract foreign investments. Many analysts believe that Indian equities could potentially outperform counterparts in other emerging markets such as China, Taiwan, and South Korea.
Furthermore, favorable monsoon forecasts are projected to enhance rural spending and contribute positively to overall economic expansion.
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