DSP Investment Managers has forecast that the Indian stock market will be the third-largest in the world by 2030.

The mutual fund house in its annual note for the year said domestic equities had outperformed their global peers in 2022.

While MSCI India Index declined around 16 per cent during the first half of the year, it recovered 10 per cent, resulting in a year-to-date (YTD) decline of 8 per cent.

This made India one of the better performing markets globally during the year. MSCI India outperformed the MSCI Emerging Markets index by around 18 per cent and the MSCI Developed Markets Index by 10 per cent.

DSP said despite potential short-term challenges, it is confident the India growth story is now a reality. The country’s structural turnaround is being accelerated by various factors, including de-leveraging by corporates, an increase in capacity utilisation, government investment in infrastructure and a well-capitalised banking system.

“We strongly believe that this will be India’s decade, with the country poised to become the third-largest economy and stock market by 2030. This represents a major shift and a significant opportunity for investors as India continues to rise in the global economy,’’ the report forecast.

The fund house added that the number of systematic investment plan (SIP) accounts doubled to almost 6 crore in 2019.

Mutual fund folios have exceeded 10 crore, and the share of employee provident fund organisation (EPFO) and insurance in the equity markets has been rising consistently.

The growth in demat accounts has seen a 50 per cent year-on-year increase, with the number of accounts at more than 10 crore.

The report said two main risk factors could moderate returns in the stock markets: interest rates and the current valuations.