India’s NSE is set to overtake Hong Kong as the world’s biggest market

Analysts say that the value of India’s National Stock Exchange is set to surpass Hong Kong as the largest trading venue in the world. This rise is a testament to the optimism of investors about India’s economic prospects.

According to the World Federation of Exchanges (a trade association of publicly-regulated stock markets), the total market capitalisation of listed companies on the NSE reached $3.7tn at the end of October. This compares with $3.9tn for the Stock Exchange of Hong Kong.

Indian share prices have risen further since that data was released, thanks to strong earnings and positive growth projections. It is now on course to become the seventh largest market in the world, after the US, China and the EU.

As China’s economy slows, Hong Kong shares have also fallen.

India’s Nifty 50 Index of Large Companies has risen by 8.1% over the last month, reaching record highs in this week. Hong Kong’s Hang Seng Index fell 6.7% over the same time period, due to a liquidity crisis within the property sector, and low consumer and investor confidence.

Abhiram Eleswarapu is the head of India equity at BNPParibas in Hong Kong. He said that over the past decade India and China had “moved pretty close together” as part an overall Emerging Markets story.

Eleswarapu said that they began diverging within the last three years. “The China stock indexes have been generally downward.” . . “The India one is increasing, while this one is decreasing.”
It stated that the strong consumption in India attracts investors. He cited increased spending by Indians on luxury goods, property and other high-end products, as well as an increase in government capital expenditures on infrastructure.

According to the IMF, India’s economy is set to grow by 6.3% this year compared to China’s 5.3%.

When you look at the world, you won’t find many countries in which you can reasonably expect to see real GDP growth at least of 6 percent on a sustained basis over the next 15 years,” said Pratik gupta. He is the chief executive of Kotak Securities and the co-head for institutional equities.

Narendra Modi’s Bharatiya Janata Party has won three of the five local assembly elections recently held in battleground states. This boosts speculation that Narendra Modi’s ruling party will easily win next year’s national election, and maintain political stability.

Gupta said that Indian companies continue to deleverage. This process has been ongoing for several years. The trend of paying off debt and issuing shares has accelerated since the pandemic. Tata Technologies, a Tata Group subsidiary, made a successful market debut in November. The IPO raised Rs30,4bn ($365mn), 69 times the subscription.

India has also been a big beneficiary of the “China Plus One” shift in supply chains. reported this week Apple, who has the majority of its manufacturing base in China, has asked component suppliers for batteries to be sourced from Indian factories.

Tesla is in talks with Modi’s government officials to set up a factory in India that will make electric vehicles.

For most of the year, India’s share prices rose more due to domestic money than by foreign money. After being net sellers of Indian equity in September and Octember, foreigners are now net purchasers.

Deepak Jasani is the head of retail research for HDFC Securities, based in Mumbai. He said that China continues to underperform and that investors focused on emerging equity markets have few options.