India’s mcap gains most after Hong Kong in ’21
MUMBAI: India’s equities markets gained the most since January after Hong Kong, among the world’s top 10 markets, highlighting sustained bullish investor sentiment especially after the recent Union budget.
Driven mostly by global liquidity inflows, the markets set new records this year, with the benchmark BSE Sensex crossing the 50,000-mark, while the Nifty crossed the 15,000-mark.
Since the onset of the calendar year, the value of India’s stock markets swelled 8.11% to $2.72 trillion, Bloomberg data showed. Hong Kong pipped India to the top position with a market cap gain of 13.41% to $7.39 trillion.
Among other large markets, the US gained 7.07% to $45.66 trillion, while China’s aggregate market cap expanded 6.14% to $11.57 trillion in 2021 so far.
In dollar terms, the Sensex gained 7.78%, while Hong Kong’s
Hang Seng Index jumped 10.32% and China’s index expanded 6.51%. “The fundamental factor supporting India’s outperformance in February is December quarter results, which have beaten expectations by an impressive margin, across industries. There are clear indications that we are in an expansionary phase in the earnings cycle. If this momentum sustains and FIIS (foreign institutional investors) continue to buy, the market can move up further,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services. “The banking sector’s excellent results saw the Bank Nifty move up by 17% so far in February”. The sustained rally has lifted Indian markets more than 100% from the lows of March last year with foreign investors continuing to pump in money on hopes of a revival in the economy buoyed by government measures aimed at driving consumption growth.
This has, however, led to concerns of stretched valuations among analysts. The benchmark Nifty currently trades at 22.36 times its estimated 12-month forward earnings, compared to the 10-year average of 15.87 times.
Foreign investor inflows so far this fiscal surged to an all-time high of $34.01 billion. Since January, foreign investors poured in $4.54 billion into Indian equities, the second-best inflow among emerging markets after Brazil, which saw investments of $4.69 billion during the same period. Domestic institutional investors were net sellers of ₹1.30 lakh crore in FY21 and ₹18,944 crore in 2021 so far. “The sharp recovery in markets has been driven by a benign liquidity backdrop, better containment of covid-19 cases, sharp recovery in corporate earnings and a marketfriendly budget,” said analysts at Motilal Oswal Financial Services Ltd in a 9 February note.
Meanwhile, India’s stock market has moved up two spots to become the eighth largest in the world in terms of market value. In the market capitalization league table, India has overtaken Germany and Saudi Arabia.
The stock market in Europe’s largest economy Germany has a value of $2.60 trillion. Only two European countries—france ($2.96 trillion) and the UK ($3.35 trillion)—are among the biggest eight markets.