The market capitalisation of companies listed on the Bombay Stock Exchange (BSE) has reached a historic $5 trillion as of May 21, marking a fresh high. This achievement is attributed to the ongoing rally in the Indian stock markets, bolstered by firm support from various sectoral indices and positive economic indicators.
Indian stock indices have shown resilience with minimal volatility over recent sessions. The conclusion of the five-phase general elections has bolstered investor confidence, with expectations of a third term for the Narendra Modi-led government. This political stability has likely triggered fresh stock purchases.
Several factors have buoyed the Indian stock market recently. April’s US consumer inflation data came in softer than expected, and India has seen a consistent moderation in inflation. Additionally, the Indian Meteorological Department (IMD) has forecasted an earlier-than-normal arrival of the southwest monsoon, expected to hit Kerala on May 31.
Last week, the Sensex gained approximately 2,000 points cumulatively. However, on Tuesday, it closed marginally lower by 0.07% at 73,953 points compared to its Friday close. The stock exchanges were closed on Monday for the general elections in Mumbai.
Remarkably, the BSE market cap reached $4 trillion in early April and surged by another trillion within a month and a half. This rapid growth reflects robust GDP forecasts, manageable inflation levels, political stability, and commendable central bank monetary policies, positioning India as the fastest-growing major economy.
Despite overseas investors being net sellers of Indian equities in recent sessions, domestic institutional investors have compensated by remaining net buyers. According to the National Securities Depository Limited (NSDL), foreign portfolio investors (FPIs) sold stocks worth Rs 8,671 crore in April and Rs 28,242 crore so far in May.