Mumbai has outdone Hong Kong: A successful year for the Indian stock market
By Agata Adamczewska
Abstract
The capitalization of companies listed on Indian stock exchanges exceeded USD 4 trillion at the end of November. It was the first such case in history and continued the trend observed on the local stock market for 8 years. However, 2023 was a special year for Indian stock markets in many aspects.
In December 2023, the National Stock Exchange of India (NSE) based in Mumbai became the seventh largest stock exchange in the world, overtaking the stock exchange in Hong Kong - as indicated by the data from the World Federation of Exchanges. In addition, India has the Bombay Stock Exchange (BSE), which is the oldest Asian stock market.
The NIFTY 50, the main stock exchange index of large companies listed on the NSE, has strengthened by 19.6% this year, marking its eighth consecutive year of growth. It consists of 50 companies responsible for approximately 77% of the capitalization of the entire stock exchange. They represent 24 sectors of the Indian economy. (Reed, 2023) For comparison, the main index of the Hong Kong Stock Exchange, Hang Seng, has lost 15.4% since January.
SENSEX, the Indian index representing 30 top BSE-listed companies, also performed well in 2023. It has increased by 18.9% since January. In addition to the well-performing indices, Indian stock exchanges experienced a boom in initial public offerings this year. According to a report by Ernst & Young, 150 companies entered national stock exchanges by October. (Sanyal, 2023)
The positive sentiment on Indian stock markets reflects the good economic situation. In the third quarter of 2023, the country's GDP grew by 7.6%, surpassing the central bank's predictions. Analysts anticipate that, based on this GDP growth rate measure, the state's economy will conclude the year with a year-on-year growth of 6.7%. (Madhok, 2023)
India is currently the world's fifth-largest economy after the U.S., China, Japan and Germany. At the same time, they are considered to be the fastest-growing emerging market. India's situation is in stark contrast to that of evident challenges faced by China, and thanks to its demographics, the country still has great potential for growth. According to the UN, having replaced China, India took the title of the most populous country this year. (Sanyal, 2023)
The largest companies on the Indian stock exchange
The largest Indian company, Reliance Industries, valued at $198 billion, operates in energy, petrochemicals, gas, telecommunications, textiles, retail, digital services, media and entertainment. The conglomerate is the 100th largest company in the world, and its CEO Mukesh Ambani is the richest man in India, with a net worth estimated at $95.6 billion.
The second largest Indian company is HDFC Bank based in Mumbai - the largest private bank in the country in terms of assets held. As of August 2023, it is also the fifth-largest bank in the world by market capitalization, estimated at $159 billion.
The third place is taken by the IT company Tata Consultancy Services. Valued at $155 billion, the company operates in 55 countries around the world, providing clients with cloud services, cybersecurity solutions, and consulting. TCS employs approximately 615,000 people worldwide. (Statista Research Department, 2023)
India forecast from HSBC
According to HSBC analysts, the Indian automotive industry and sectors such as retail, real estate, and telecommunications will enter 2024 strong and ready to increase profits further. However, manufacturers in the Fast-Moving Consumer Goods (FMCG) sector, which includes products with a quick turnover and relatively low cost, such as food, beverages, toiletries, and cleaning products, along with those in chemicals and municipal service providers, find themselves in a slightly more challenging situation. (Madhok, 2023)
In 2024, the people of India will elect their government for the next 5 years. Polls and recent state elections indicate that the ruling right-wing Bharatiya Janata Party is positioned to secure victory and be re-elected. The party's strong focus on pro-business and market-oriented policies, coupled with its commitment to economic reforms and development initiatives, suggests that a continued BJP-led government would likely ensure the persistence of current economic policies. This includes measures to boost investment, streamline regulatory frameworks, and promote economic growth, thereby maintaining a sense of policy continuity for India's economic landscape. (Reed, 2023) According to HSBC, expectations for such a scenario may cause the first 3-4 months of next year to be bullish for Indian stock exchanges.
References
Madhok, D. (2023, December 26). India joins the ranks of stock market superpowers | CNN Business. CNN. https://edition.cnn.com/2023/12/26/markets/india-stock-market-investment-growth-intl-hnk/index.html
Reed, J. (2023, December 10). India’s NSE set to take Hong Kong’s spot among world’s largest markets. Www.ft.com; Financial Times. https://www.ft.com/content/f263bf84-c3e3-4a0e-b2c6-749e3cc172a0
Sanyal, S. (2023, December 12). India overtakes Hong Kong to become the world’s seventh largest stock market. CNBC. https://www.cnbc.com/2023/12/12/india-overtakes-hong-kong-to-become-worlds-seventh-largest-stock-market.html
Statista Research Department. (2023, September 26). Number of employees at Tata Consultancy Services 2005-2020. Statista. https://www.statista.com/statistics/328244/tcs-employees-numbers/