M-Cap crosses $ 2 trillion, surge likely to continue

India’s stock market capitalisation (M-Cap) has crossed over $2 trillion because of relentless buying by both local and offshore investors which give a positive effect to the Indian market as it has become the ninth-largest equity market globally, not only this, in emerging market also, it is second after China.

After January, Indian stock has generated 28 percent returns in Dollar term which is highest among the top 20 global market based on M-Cap. Because of this rally, India M-Cap to GDP ratio peaked at 0.78 percent with 10 years average.

M-Cap to GDP ratio is a tool used by equity strategist to assess the relative valuation of the market above the 10 years average. For an emerging market, this ratio remains between 0.2 to 0.8 while for a developed market this should be between 0.5-2.2.

In India, relatively high M-Cap to GDP ratio put a reflection of the strong appetite of Indian entrepreneur to access public equity funding and they also get a positive return from those investors. However, this ratio expected to be in the range of $8-10 trillion by 2030 in India.