Market cap of BSE-listed companies crosses $5.5 trillion for first time

Continued buying by domestic investors, expectations of strong economic growth, policy continuity, and an above-normal monsoon have further boosted the market.

The market capitalisation of all listed firms on the BSE hit a record high, surpassing $5.5 trillion for the first time ever. This marks a 22.6 percent increase from $4.2 trillion at the beginning of the year, driven by gains in the Sensex and broader markets, including the BSE Midcap and SmallCap indices. The Sensex has risen 13% this year, while the BSE MidCap and SmallCap indices have surged over 30% each.

This rally is fueled by optimism around the return of the Bharatiya Janata Party-led government, a positive global market environment, the resurgence of foreign portfolio investors (FPIs) and a positive budget. Continued buying by domestic investors, expectations of strong economic growth, policy continuity, and an above-normal monsoon have further boosted the market.

Meanwhile, some analysts are cautious due to high valuations and weak June-quarter earnings. Results for Q1FY25 show only a 0.7 percent YoY increase in net profits for Nifty 50 companies, with sluggish volume growth and moderate margin compression. The market has reacted positively to modest earnings beats while overlooking larger misses, reflecting a selective investment approach. Recent sharp price increases in lagging sectors have made stock-picking even more difficult, according to a recent Kotak note.

Few analysts say India's long-term structural prospects remain strong, with favourable macro indicators and a Union Budget reflecting the government's commitment to economic stability. The government continues to focus on growth while adhering to its fiscal consolidation path.

ICICI Securities, in its note, said recent tax amendments should benefit asset allocation schemes and allow for higher taxes where feasible. Overall, the Budget is seen as positive and supports a healthy economic cycle. With high equity valuations, a hybrid and multi-asset investment approach is recommended to manage exposure across asset classes. Large-cap stock valuations are reasonable compared to mid and small caps, they added.

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