Jefferies: "Indian Stock Market to Double Market Cap by 2030... Reaching $10 Trillion"

More Than Double Increase
Indian Stock Market Soars Over 20 Times in 20 Years
Potential for Further Growth

The market capitalization of the Indian stock market is expected to more than double to $10 trillion by 2030, according to global investment bank (IB) Jefferies. Last month, the total market capitalization of all stocks listed on the Indian stock market surpassed that of the Hong Kong stock market, making it the fourth largest stock market in the world.

On the 22nd (local time), Jefferies reported that the market capitalization of the Indian stock market has reached $4.5 trillion this year. This is the result of a continued upward trend after surpassing $4 trillion for the first time in history last December. Among emerging markets, India has shown a growth rate of more than 20 times over the past 20 years due to its high economic growth potential.

While some concerns about overheating have been raised due to the high annual growth rate, there is still room for further growth.

First, despite concerns about a global economic slowdown, the Indian economy has maintained a high growth rate every year. The economic growth rates for the past three years were 8.7% in 2021, 7.2% in 2022, and 7.3% in 2023, with a forecast of 6.5% this year, which is expected to be more than double the global average (3.1%).

Jefferies forecasts that India’s GDP will reach $5 trillion by 2027, supported by a rising population and ongoing economic reforms. Bloomberg noted, “The market capitalization of the Indian stock market closely tracks GDP (Gross Domestic Product).”

Another factor supporting the rosy outlook is the inflow of stock market capital from China, whose economic growth is slowing, into India. India, recognized as the “Next China,” is competitive due to its world’s largest population and cheap labor productivity. It is also one of the countries expected to see growth in the domestic market due to an expanding middle class.

The fact that India still holds a small share in the global stock market is also cited as a factor for further growth. Jefferies analyzed that the increase in global liquidity triggered by artificial intelligence (AI) is a factor attracting foreign investors to the Indian stock market. Jefferies’ Mahesh Nandurkar and Chris Wood explained, “The share of the Indian stock market in global stock indices is less than 2%, which means there is ample room to increase foreign investors.”

Meanwhile, Morgan Stanley Capital International (MSCI) recently announced that it will raise the weighting of Indian stocks in its emerging markets index from 17.9% to 18.2%. This is the largest increase, nearly doubling since the end of 2020. On the other hand, the weighting of Chinese stocks was lowered from 26.6%. If India continues its current growth trend, it is expected that its share in the emerging markets index will soon exceed 20%.