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BSE market cap crosses $800bn mark

by admin
December 2nd, 2006

Investors in Indian markets are worth a whopping $800 billion now. And the figure looks all set to cruise past the trillion dollar milestone in 2007. On Friday, as the sensex picked up another 148 points to close at 13,845, Bombay Stock Exchange’s market capitalisation settled at $810 billion (Rs 36.16 lakh crore).

The latest data show that India is the 14th largest market in the world in terms of market capitalisation and the second largest among the BRICs countries, if the bourses in Hong Kong and mainland China are considered separate entities. At $778 billion, China is just snapping at India’s heels while Russia, with a market capitalisation of $985 billion, is far ahead of the other three BRICs nations. In this group, Brazil, with a market capitalisation of $658 billion is far behind India and China. Interestingly, if we consider Chindia as an investment destination along with Hong Kong, then at a combined market cap of $3.4 trillion, this will be the fourth largest market in the world, behind the US, Japan and the UK. In 2006, India’s market capitalisation has grown by nearly 47%. Now given the bullish long term outlook, even if the country’s market cap grows by just 25%, India will be a trillion-dollar market place.

Comparatively it had a better run than the US which rose at a rate little over 10%, the UK about 21% and South Korea about 17%. However, India’s market cap growth rate pales when compared with China and Russia. The Chinese market grew by about 2.5 times, courtesy a series of large IPOs in 2006 while the Russian market rose by about 80% since the year began.

Since 2003, looking at opportunities that India’s fast growing economy could offer, foreign fund managers have offered poured money into its stock market. Sebi data show that FIIs have poured nearly $35 billion in almost four years. A steady flow of new fund offers from mutual fund houses, which were able to offer retail investors a variety of equity fund products, have also infused about Rs 27,000 crore into the stock market. Brokers and dealers said these two investing groups, along with other financial institutions and the retail lot who invested directly, helped take the Indian market to its current high.

On Friday, while the BSE crossed another milestone, the nifty on the NSE too achieved one of its own: in intra-day trade it went past the 4K mark for the first time in history and ended at 3,998. Backed by robust sales number for November, stocks of automobile companies led the rally on Friday, with banking, FMCG and healthcare stocks also attracting good investor interest.

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