Mumbai: The market capitalization of Indian listed companies on NSE surpassed USD 4 Trillion (Rs 334.72 trillion) on December 1, 2023. On the same day, the Nifty 50 Index touched an all-time high of 20,291.55. The Nifty 500 index also touched an all-time high of 18141.65 on the same day, indicating that equity market rally is not restricted to only the large capitalized stocks.
The achievement of this milestone is a testament of the vision outlined for the Amrit Kaal which includes a technology-driven and knowledge-based economy with strong public finances, and a robust financial sector.
The journey of market capitalization of Indian listed companies from to USD 2 trillion (July 2017) to USD 3 trillion (May 2021) took about 46 months whereas the last USD 1 trillion i.e., from USD 3 trillion to USD 4 trillion took only about 30 months. While the USD 4 trillion market capitalization is an important milestone, data suggests that only 0.35% of the total private companies registered with Ministry of Corporate Affairs, Government of India are listed on the Exchanges indicating an enormous number of companies which can tap the equity market for their funding needs.
The resource mobilization by corporates including the Small and Medium Enterprise in the primary market has been encouraging and has provided an effective alternative mechanism in addition to the traditional methods of fund raising. In the current financial year as of October 2023, more than Rs. 5,00,000 crores have been mobilized through primary markets across equity and corporate bonds.
The market capitalization of listed companies increased at a compounded annual growth rate (CAGR) of 17.5% in the last 10 years. The Nifty 50 index delivered 14% CAGR in the last 10 years and 14.9% in the last 20 years.
The top 3 companies by market capitalization – Reliance Industries Limited, Tata Consultancy Services Limited and HDFC Bank Limited remained the same when the market capitalization hit the USD 2 trillion, USD 3 trillion, and USD 4 trillion mark.
Whie India ranks amongst the top 5 nations based on market capitalization, the market capitalization of listed companies on NSE to India’s GDP stood at 1.18 or 118% which is lower as compared to developed markets such as United States of America or Japan.
The share turnover velocity at NSE for calendar year 2023 as on date stood at 47%. The share turnover velocity is way below some of the global markets such as United States of America, Japan, South Korea, China and Brazil. A very low percentage of companies listed on the exchange and comparative lower share turnover velocity, indicates an immense growth potential for deepening of Indian market in the years to come.
The daily average turnover has seen a year-on-year growth of 27% in the equity segment and 5% in equity derivatives in this financial year as compared to the previous financial year. In the last 10 years, the equity segment’s daily average turnover has increased by over 6 times and that of equity derivatives’ daily average turnover has increased by over 5 times.
Shri Sriram Krishnan, Chief Business Development Officer, NSE said, “NSE listed companies’ market capitalization surpassing the USD 4 trillion mark is an important milestone in the country’s journey towards the USD 5 trillion economy. The positive sentiment in the economy has provided a thrust to the capital markets.
NSE as a market infrastructure institution will continue to thrive and provide the best-in-class market infrastructure for resource mobilization for the Government and the Corporates at the same time. It will continue to provide a robust platform for investors to invest in variety of financial products, thereby supporting the important aspect of capital formation in the country.”
About National Stock Exchange of India Limited (NSE):
National Stock Exchange of India (NSE) is the world’s largest derivatives exchange by trading volume (contracts) as per the statistics maintained by Futures Industry Association (FIA) for calendar year 2022. NSE is ranked 3rd in the world in the cash equities by number of trades as per the statistics maintained by the World Federation of Exchanges (WFE) for calendar year 2022. NSE was the first exchange in India to implement electronic or screen-based trading. It began operations in 1994 and is ranked as the largest stock exchange in India in terms of total and average daily turnover for equity shares every year since 1995, based on SEBI data. NSE has a fully integrated business model comprising exchange listings, trading services, clearing and settlement services, indices, market data feeds, technology solutions and financial education offerings. NSE also oversees compliance by trading, clearing members and listed companies with the rules and regulations of SEBI and the exchange. NSE is a pioneer in technology and ensures the reliability and performance of its systems through a culture of innovation and investment in technology.
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