This growth will be driven by India’s unique combination of economic size, sustained growth, and broadening diversity within the market, the brokerage said.
Over the past decade, India’s market cap has surged from $1.2 trillion in 2014 to $5.4 trillion presently, positioning it as the fifth-largest economy globally. This growth has been accompanied by a diversification of the investible universe, with contributions from smaller companies and new sectors, Motilal Oswal said.
India now boasts 11 mega-cap companies valued at over Rs 5 lakh crore, up from zero in 2014. The number of mid-sized companies (Rs 25,000 crore to Rs 1 lakh crore market cap) has also quadrupled, while smallcap companies have increased significantly.
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India’s growing economic stature is drawing international investors, and mega-cap companies like Reliance Industries and HDFC Bank are increasingly featured in global indices. The brokerage said with more Indian firms expected to join the ranks of international investment indices, the influx of foreign capital is likely to enhance liquidity, boosting overall market dynamics.Several factors are propelling this growth in India’s equity market, including advancements in infrastructure, favourable government policies, and a thriving startup ecosystem, Motilal Oswal said. Additionally, India’s role as a key alternative to China in the global supply chain, alongside stable macroeconomic conditions, has reinforced investor confidence. India’s market cap now accounts for 4.3% of the global total, up from 1.6% in 2013.Motilal Oswal expects the market to double to $10 trillion within the next 5-6 years, underpinned by strong corporate earnings and consistent investment flows. Largecap stocks remain a preference due to high valuations for mid and smallcaps. Key sectors to watch include BFSI, IT, healthcare, and real estate, with top investment picks including ICICI Bank, HDFC Bank, and L&T.
As India advances, its equity market offers a compelling mix of growth and diversity, positioning it as a significant global investment destination in the years ahead, Motilal Oswal said.
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