BSE mcap hits $5 trillion mark for first time; adds last trillion in just 6 months

The total market capitalization of all BSE-listed companies briefly topped the $5 trillion mark (Rs 416.5 lakh crore) during the trading session Tuesday, May 21. However, by the close of the session, the market capitalization of the Indian stock markets was merely a few steps below the mark at $4.97 trillion (Rs 414.62 lakh crore).
 

BSE's total market capitalization scaled the $4 trillion-mark in November 2023 and took about six months to add another $1 trillion to it to race past $5 trillion-levels, thanks to the strong bull run. All the BSE-listed firms reached the market cap of $1 trillion back in May 2007, doubling in over a decade to $2 trillion in July 2017, and then reaching the $3 trillion mark in May 2021.
 

Other than India, US, China, Japan and Hong-Kong have a total market capitalization of more than $5 trillion. According to Bloomberg, India's market capitalization has risen nearly 12 per cent in 2024 so far. A number of new listings on the bourses are another contributing factor in the mcap addition.
 

Since the beginning of the year, Indian companies have added more than $633 billion in the total marketcap of BSE, thanks to the strong outperformance of the broader markets- BSE midcap and BSE smallcap indices- which are at their all time highs. However, the 30-share benchmark index BSE Sensex is about 1.67 per cent below its all time highs.
 

The $5 trillion market cap for BSE listed companies is a major milestone that reflects the sustained momentum of the Indian stock market, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
 

"It is important to understand that this landmark has been achieved when the market is almost flat trading in a range. This means the contribution to the up move in market cap has come from the broader market. PSUs have contributed significantly to this achievement," he said.
 

The surge in the market capitalization of Indian equities is primarily driven by a surge in broader market indices. These gains have come despite volatility in equities in recent months due to election and global factors. BSE Sensex has gained only 2.33 per cent in 2024 so far, while the BSE midcap index and the BSE smallcap index are up 16.62 and 11.37 per cent during this period.
 

The Indian equity market is consistently achieving significant milestones. Reaching $5 trillion market capitalization places India among an elite group of nations, alongside the United States and China. This accomplishment can be attributed to retail investors, who have steadfastly participated despite market volatility, said Sunil Damania, Chief Investment Officer at MojoPMS.
 

"The government’s accelerated reforms and the positive response from Indian corporations have contributed to sustained earnings growth attracting investor interest. The current rally is driven by a combination of earnings growth and liquidity, which could propel India's market capitalization to $10 trillion within the next five years," he added, expecting some hiccups in this growth.
 

India's mcap-to-GDP ratio, also known as the Buffett Indicator , currently stands more than 150 per cent, while it was around 120 per cent when India's mcap scaled the $4 trillion mark. However, a market is considered to be fair valued if the ratio falls between 75-90 per cent.