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Indian stock market at 4th as surpasses Hong Kong

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Discover how the Indian stock market has climbed to an impressive 4th position, overtaking Hong Kong, and gain insights into the factors driving this remarkable growth.

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India’s Stock Market Growth

India’s stock market has achieved a significant milestone by surpassing Hong Kong’s stock market for the first time. This is a remarkable achievement for India, a country in South Asia that has been attracting investors due to its growth prospects and policy reforms.

According to data compiled by Bloomberg, the combined value of shares listed on Indian exchanges reached $4.33 trillion, while Hong Kong’s stock market value stood at $4.29 trillion. This makes India the fourth-largest equity market globally. In fact, India’s stock market capitalization crossed $4 trillion for the first time on December 5th, with half of that growth occurring in the past four years.

The boom in India’s equities can be attributed to the rapidly growing retail investor base and strong corporate earnings. As the world’s most populous country, India has positioned itself as an alternative to China, attracting capital from global investors and companies. Its stable political setup and consumption-driven economy, which is among the fastest-growing of major nations, have contributed to its success.

Ashish Gupta, the chief investment officer at Axis Mutual Fund in Mumbai, believes that India has all the right ingredients in place to further accelerate its growth momentum.

Hong Kong’s Challenges

While India’s stock market has been thriving, Hong Kong has been facing significant challenges. Some of China’s most influential and innovative firms are listed in Hong Kong, but the city has been experiencing a historic slump. Beijing’s strict anti-COVID-19 measures, regulatory crackdowns on corporations, a property-sector crisis, and geopolitical tensions with the West have all contributed to eroding China’s appeal as the world’s growth engine.

These challenges have triggered a massive decline in Chinese and Hong Kong stocks, with their total market value plummeting by over $6 trillion since their peaks in 2021. Hong Kong has also seen a decline in new listings, losing its status as one of the world’s busiest venues for initial public offerings.

However, some strategists believe that there may be a turnaround in the future. UBS Group AG predicts that Chinese stocks will outperform Indian stocks in 2024, as the battered valuations in China suggest significant upside potential once sentiment improves. On the other hand, Bernstein expects the Chinese market to recover and advises investors to take profits from Indian stocks, which it considers expensive.

For now, momentum seems to be on India’s side.

Foreign Investors Favoring India

Pessimism towards China and Hong Kong has deepened in the new year due to a lack of major economic stimulus measures. The Hang Seng China Enterprises Index, which tracks Chinese shares listed in Hong Kong, has already declined by about 13% after experiencing a record four-year losing streak in 2023. The index is approaching its lowest level in almost two decades, while India’s stock benchmarks are trading near record-high levels.

Foreign investors who were previously interested in China are now directing their funds towards India. Global pension and sovereign wealth managers are also favoring India, according to a study by the London-based think-tank Official Monetary and Financial Institutions Forum. In 2023, overseas funds invested over $21 billion in Indian shares, contributing to the country’s benchmark S&P BSE Sensex Index’s eighth consecutive year of gains.

Goldman Sachs Group Inc. strategists, including Guillaume Jaisson and Peter Oppenheimer, stated in a note on January 16th that there is a clear consensus that India is the best long-term investment opportunity. This statement was based on the results of a survey conducted during the firm’s Global Strategy Conference.

Vinay Kumar is Marketing Professional turned Entrepreneur, believes in turning ideas into reality.

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