India Achieves Highest Market Cap Growth Among Top Global Markets

India's equity market achieved a remarkable milestone in December 2024, registering a 9.4% surge in market capitalization, the highest among the world’s top ten equity markets. This significant rebound, the largest in over three years, elevated India’s total market cap to $4.93 trillion, according to Bloomberg. The growth comes after four consecutive months of decline, marking a strong resurgence driven by renewed foreign investor activity and standing out against a backdrop of subdued global market performance.  

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Globally, India emerged as the best performer among leading equity markets. The United States, the largest equity market with a capitalization of $63.37 trillion, experienced a 0.42% decline, ending a seven-month streak of consecutive gains. Similarly, China, the second-largest market at $10.17 trillion, saw a 0.55% drop, marking its fifth consecutive month of contraction. Other significant markets like Japan and Germany reported declines of 2.89% and 1.22%, respectively.  

In contrast, markets such as Hong Kong, France, Saudi Arabia, and Taiwan showed modest gains of 4.13%, 0.2%, 2.42%, and 3.3%, respectively. However, Canada, the UK, and Australia faced sharp declines, with Canada witnessing a significant 5.56% fall, the UK dropping by 2.84%, and Australia enduring a 6.6% decrease.  

India’s performance was bolstered by foreign investor activity, which brought in $2.37 billion in December, reversing the net outflows of $11.2 billion in October and $2.57 billion in November. Despite this, domestic indices exhibited mixed results. The benchmark Sensex and Nifty both declined by 1.7%, while the BSE MidCap index rose by 0.5%, and the BSE SmallCap index recorded a marginal dip of 0.3%.  

Key Drivers of Growth

The resurgence in India’s market cap is attributed to multiple factors. Renewed foreign investor interest, following a period of substantial outflows, played a crucial role. Global concerns, including geopolitical tensions, potential tariff wars post-US elections, and tightening policies by central banks, weighed on other markets but had limited impact on India.  

Domestically, India’s resilience was evident despite challenges such as weaker corporate earnings, tighter liquidity, delayed government spending, and inflationary pressures earlier in the year. The robust structural growth story of the Indian economy continues to attract investor confidence, even as GDP growth is expected to decelerate to 6.3% by 2025 due to fiscal consolidation and tighter credit growth stemming from the Reserve Bank of India’s macro-prudential measures.

Conclusion  

Looking ahead, analysts believe that India is relatively insulated from global shocks, such as trade tensions between the US and China. While rate cuts by the RBI are anticipated in the first quarter of 2025, with cumulative reductions capped at 50 basis points by mid-year, macroeconomic conditions may keep retail loan growth subdued. India’s equity market remains a beacon of stability and growth amidst global uncertainties. The December rally underscores the country’s potential to outperform major global markets and highlights its enduring appeal to investors seeking long-term opportunities in an otherwise volatile global landscape.