India's Stock Market: Changing The Rules

There is an old adage that there is a silver lining behind every cloud. While inflation is a sore point for every section of society, the plus point or the silver lining here is India’s booming stock market. As per the latest estimates, there is a 10 percent boom in the Indian stock market, while China gets a 23 percent shock, that is, there is a significant crash. Presently, the world's most valuable stock market is in the USA. NASDAQ and NYSE rule the roost and stand at a whopping 19.5 and 24.6 trillion USD. China is far second at 7.05 trillion USD and India is far behind that at 3.32 trillion USD. India is not at the top spot, but given the latest development, India is inching closer to realising its dream of becoming one of the key markets in the world.

Is it possible for India to climb the ladder?

We are witnessing Indian stock markets grow strength to strength year after year. This is despite the fluctuation in Rupee price which is set to draw investments out of the Indian markets. In fact, India's stock market recently overtook UK in terms of market capitalisation. This was a pivotal moment for the Indian economy. It is in our benefit if we draw more investments and our companies get larger.

Given the strict lockdowns in China due to Covid, the west has withdrawn about 5 Trillion USD from the country. This is a good opportunity for India to emerge as Asia's strongest growing economy. The nation is informally touted as the next China, and given the exodus from the Chinese stock market, India is set to become an alternative economic hub. These changes are reflected resoundingly in the stock market investments of the two countries.

These trends are based on practicality. For example, Mark Mobius, investor, and partner of Mobius Capital Partners has allocated higher weight to India than China since the beginning of 2022. Jupiter Asset Management has the majority of its emerging market funds parked in India. M&G Investments (Singapore) Pte has made more allocations to India. As per Goldman Sachs, India's share market capitalisation is expected to rise to USD 5 trillion by 2024. To cut the long story short, we are heading for global economic rearrangement.

How will it impact the people?

Sadly, not much. This is because about 2 percent of Indians invest in the stock market, that too mainly in Gujarat and Maharashtra, which is a whisker when compared to the USA (50 percent) and China (7 percent). Even if the market grows, the common man will not get anything in hand. The companies investing in India will be the primary beneficiaries. For those in India looking to kickstart their investment portfolio, this is a good time to start.