India surpasses Hong Kong to become world’s fourth-largest stock market

India’s stock market has surpassed Hong Kong’s for the first time with the total value of shares listed on Indian exchanges reaching $4.33 trillion as of Monday’s close, exceeding Hong Kong’s $4.29 trillion, according to Bloomberg data. This makes India the world’s fourth-largest equity market.

The stock market capitalisation surpassed $4 trillion on December 5, with about half of that coming in the past four years, the report added.

Why India’s stock market is booming?

‘Stable political environment and a consumption-driven economy’

Indian equities are surging, fuelled by a growing base of retail investors and robust corporate earnings. India presents itself as a viable alternative to China, attracting global capital and companies due to its stable political environment and a consumption-driven economy among the fastest-growing globally, according to the report.

Ashish Gupta, CIO at Axis Mutual Fund in Mumbai, expressed optimism, saying, “India has all the right ingredients in place to set the growth momentum further.”

‘China’s appeal as a global growth engine has diminished’

This upward trajectory in Indian stocks contrasts sharply with Hong Kong, which has experienced a historic downturn. Factors contributing to Hong Kong’s decline include stringent anti-Covid-19 measures in Beijing, regulatory crackdowns, a property-sector crisis, and geopolitical tensions with the West, the report said.

This has diminished China’s appeal as a global growth engine, resulting in a significant equities downturn, with Chinese and Hong Kong stocks losing over $6 trillion in total market value since their 2021 peaks, according to the report. Hong Kong’s role as a prominent hub for initial public offerings has waned amid the turmoil, it added.