The market capitalisation of all companies listed on the Bombay Stock Exchange crossed $4 trillion on Wednesday — way ahead of India’s GDP at $3.39 trillion — as the Sensex soared 727.71 points or 1.10 per cent to end at 66901.91.
The market capitalisation reached Rs 333 lakh crore, or $4 trillion, at the exchange rate of 83.31. It has climbed over $600 billion since the start of the year.
It is now the fifth largest by market value after the US ($47.78 trillion), China ($9.74 trn), Japan ($6.02 trn) and Hong Kong ($4.78 trillion). At the NSE too, investors have reasons to rejoice as the Nifty crossed the 20000 mark.
The markets rose on hopes that the US Federal Reserve is finished with its tightening and may even start cutting interest rates from next year.
Senior Fed official Christopher Waller, flagged the possibility of a rate cut by spring if inflation continues to fall. One of the main reasons behind the surge in India's market cap is the rally in small and midcap stocks. As per Bloomberg data, India's market cap has risen 15 per cent this year.
The $ 4 trillion feat which comes earlier than GDP hitting the same number, is expected to add another tailwind to Indian markets amid resilient growth and earnings upgrade expected in the months ahead.
BSE-listed firms hit the $1-trillion market cap milestone on May 28, 2007 and it took over 10 years to double. The market cap surpassed $2 trillion on July 10, 2017. Meanwhile, the BSE m-cap hit the $3 trillion mark in May 24, 2021.
A CLSA report says the performance of Nifty — another market bellwether index — would be dependent on the outcome of the Lok Sabha election and trends in bond yields
It could not rule out further gradual de-rating in the NSE Nifty 50 in 2024 before valuation froth ends as earnings growth catches up. A significant factor preventing this could be a sharp cool-off in bond yields, especially if the US Federal Reserve shifts away from its higher-for-longer stance, the brokerage said in a note on Tuesday.
In the Indian market, the differential between the 10-year government securities yield and the 12-month forward Nifty earnings yield stands at 1.96 percentage points. This is dangerously close to the threshold of 2.0 percentage points, which has historically been seen as a signal that the market has peaked.
"The BSE market cap's ascent to the $ 4 trillion mark signals the start of a fresh momentum in the stock market. Indian stock market is rallying due to solid second-quarter earnings and a drop in crude oil prices," Satish Menon, executive director, Geojit Financial Services, said.
IREDA shines
A stock that was on fire was the state-owned Indian Renewable Energy Development Agency (IREDA) whose debut surprised even some of the biggest optimists.
Its shares ended the first day with a premium of 87.5 per cent to the issue price.
The stock debuted at Rs 50, a gain of 56.25 per cent from the issue price of Rs 32 on the BSE. The counter built on these gains and ended at Rs 59.99, a rise of 87.46 per cent.
The focus has now shifted to the listing of Tata Technologies and Gandhar Oil Refinery on Thursday.
MCX gold glitters
Gold hit a record high on the MCX on Wednesday. The February future contract for the metal was Rs 62,934 per 10 gram. It later closed at Rs 62,711 per 10 gram.
"Gold prices surged on Wednesday, trading at an all-time high of Rs 63,500 per 10 gram in Delhi, up Rs 750 following a bullish trend overseas," Saumil Gandhi, senior analyst of commodities at HDFC Securities, said.
