India’s equity markets have achieved a remarkable milestone, reaching a record-breaking market capitalisation of $5.29 trillion in 2024. This achievement positions India as the fourth largest equity market globally, following the United States, China, and Japan. The surge in market capitalisation reflects the country’s robust economic growth and increasing investor confidence.
A record year for Sensex and Nifty
The Indian equity market’s benchmark indices, Sensex and Nifty, hit historic highs this year, closing at 85,978.25 and 26,277.35, respectively, according to a report by Pantomath Group. This growth highlights the resilience and vibrancy of India’s financial markets amidst global economic challenges.
Economic growth drives equity markets
India’s GDP growth stood at 8.2% in FY24, exceeding expectations despite inflationary pressures and subdued consumption during the first half of FY25. The report anticipates a rebound driven by increased government spending, a revival in rural demand, and private-sector investments.
Madhu Lunawat, CIO of Bharat Value Fund, highlighted the growing interest among domestic and global investors in India’s equity markets. “There are ample opportunities through AIFs, PMS, and mutual funds for medium-term investments, enabling participation in India’s long-term growth story,” Lunawat said.
Sectoral contributions to market growth
Key sectors contributing to India’s equity market growth include:
- Agriculture: Driven by the ‘Vision 2047’ roadmap, which focuses on sustainable farming, crop diversification, and climate-resilient seeds.
- Automobile: Growing by 10% to ₹6.14 lakh crore, with electric vehicle (EV) adoption and exports projected to reach $30 billion by FY26.
- Renewables: India’s commitment to net-zero emissions by 2070 and 50% renewable energy by 2030 underpins growth in this sector, supported by 100% FDI and the National Green Hydrogen Mission.
Strong corporate earnings and future prospects
Indian corporate earnings are poised for further improvement as commodity prices soften, bolstering profitability and margins. Devang Shah, Head of Retail Research at ACMIIL, noted that robust domestic demand and private capital expenditure revival will sustain this momentum.
A promising future for investors
With increasing investor preference for equities, sustainable fund flows are expected to provide liquidity, supporting markets during corrections. India’s equity markets are set to continue their upward trajectory, driven by favourable macroeconomic factors and strong domestic demand.
