India market capitalization touches $10 trillion by 2030


Anjali Sharma

GG News Bureau
NEW YORK, 23rd Feb.
According to foreign brokerage firm Jefferies in a report released on Thursday said that  India market cap is the 5th largest globally (US $4.5 trillion) but its weight in global indices is still low at 1.6% (10th rank), foreign brokerage.

The report said that this should change as market free float rises and some weight anomalies get sorted out. Assuming market returns in line with the last 15-20 year history and new listings, India will become nearly a $10 trillion market by 2030 impossible for large global investors to ignore.

It noted that with a consistent history of 10-12% USD CAGR over the last 10 & 20 years, India is now the 5th largest equity market & market cap will likely touch $10 trillon by 2030.

Jefferies saidtThe reforms should maintain India’s ‘fastest growing large economy’ status. Strong trend in domestic flows have reduced market volatility and decadal low foreign ownership offers valuation cushion. RoE-focused corporate sector with 167 companies more than $5 billion market cap leave ample choices to investors.

The report noted rising entrepreneurship/vibrant start-up ecosystem is driving innovation. 10 years of investment down cycle & risk aversion trend has now inverted with housing upcycle and corporate D/E ratio at an all-time low.

India is home to 111 unicorns (market value $350 billion) making it the 3rd largest unicorn hub globally after US and China, the report said.

Govt’s focus on developing digital infrastructure, globally the cheapest data rates and the abundant homegrown talent pool have been the key drivers.

India is becoming a services exports hub. Services export (including remittances) now accounts for $450 billion/year. Several large global organisations have 10-20% of their employees based in India including companies like JP Morgan, Intel, NTT etc. Superior digital infra, young & well educated human resources should drive this segment to keep growing, the report stated

RoE-focused corporate sector is a key positive for minority investors. Listed equity market is among the most diversified emerging markets. Strong institutional framework of regulators (SEBI, RBI), intermediaries (responsible asset managers) has helped develop a large domestic investor base.

The report said that sustainable investment habits give visibility of $50 billion/year flow into equities from domestic investors which will likely keep the valuations on the expensive side but also reduce market volatility.

India will be 3rd largest economy by 2027. Over the last 10 years, India’s GDP has grown by 7% CAGR in USD terms to $3.6 trillion jumping from the 8th largest to the 5th largest economy.

Over the next 4 years, India’s GDP will likely touch $5 trillion making it the 3rd largest economy by 2027, overtaking Japan and Germany being the fastest growing large economy with the tailwinds of demographics (consistent labour supply), improving institutional strength and improvement in Governance, it added.

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