India adds $1 trillion in m-cap since March; highest gain among top 10 markets globally

India’s benchmark indices, the Sensex and Nifty, have advanced 12.5 percent and 13.5 percent during this period

India's listed companies have added nearly $1 trillion in market capitalization in absolute terms to $5.33 trillion since early March 2025, driven by a sustained rally following a five-month correction between October 2024 and February 2025.

In percentage terms, m-cap has surged by over 21 percent — the highest increase among the world’s top 10 equity markets. India is currently the fifth largest market globally after US, China, Japan and Hong Kong.

Globally, Germany posted the second-largest gain after India, with its mcap rising nearly 14 percent during this period. Canada followed with an increase of nearly 11 percent, while Hong Kong saw a gain exceeding 9 percent. Japan and the United Kingdom recorded gains of around 8 percent each.

The United States, which is the world's largest equity markets, registered a more modest rise of around 2.4 percent, while China, the second-largest, saw a 2.7 percent increase. France and Taiwan reported gains of over 3.9 percent and 3.2 percent, respectively.

India’s benchmark indices, the Sensex and Nifty, have advanced 12.5 percent and 13.5 percent during this period, while the broader BSE MidCap and SmallCap indices climbed over 20.7 percent and 26 percent respectively. However, this strong rally has driven valuations to stretched levels once again and analysts started downgrading earnings estimates.

According to a recent note by JM Financial, Nifty50 EPS estimates for FY25 saw a marginal upward revision of 0.3 percent in April 2025. In contrast, estimates for FY26 and FY27 were revised downward by 1.1 percent and 1.0 percent, respectively. The slight upgrade in FY25 EPS is attributed to muted analyst expectations for Nifty's fourth-quarter FY25 profit after tax (PAT) heading into the results season.

However, the broader EPS downgrade trend continues, as the April 2025 cuts for FY26 and FY27 are sharper than those recorded in previous months, 0.9/0.6 percent in February and 0.2/0.6 percent in March, indicating increasing caution in the forward earnings outlook. The Bloomberg consensus earnings estimates for Nifty 50 companies for FY26 currently stand at 14 percent on a y-o-y basis.

In a recent interview with Moneycontrol, Sanjiv Prasad of Kotak Institutional Equities said Indian equities are broadly overvalued. While the Nifty 50 trades at 22x forward earnings — historically reasonable — this is skewed by low P/E sectors like banking, metals, and oil & gas.

A deeper look shows stretched valuations across consumption, investment, and IT sectors, often exceeding pre-pandemic levels despite weaker earnings growth. Rising risks to revenue, margins, and competition could pressure profits. Excluding financials, most sectors look expensive, with markets still pricing future earnings using outdated benchmarks. A valuation reset may be inevitable as growth and profitability face structural headwinds, say analysts.

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