India Becomes Ninth Largest Equity Market In The World, Can Inch Further Up !

Benchmark index BSE Sensex touched its all-time highs on May 19, 2017 when it reached 30712.35. The Indian equity markets are now the ninth largest equity markets in the world and second largest equity markets in Asia after China. The total market capitalisation is now $2 trillion and the market cap to GDP ratio stands at nearly 0.88. This ratio suggests further room for markets to inch up as we observe. The market cap to GDP ratio was 1.4 during the 2008-09 period.

FIIs remained net buyers to the tune of  Rs.6086.47 crore in the Indian equities while the DIIs were net sellers to the tune of Rs.1,463.08 crore. Sensex gained 1.46 per cent in the past couple of weeks and Nifty gained 0.77 per cent during the similar time frame. The mid-cap index slipped 3.72 per cent while small-cap index slipped 4.47 per cent indicating a divergence in the broader market trend. Power sector was amongst the worst performers with the index losing 4.25 per cent in value along with the realty sector index that slipped 3.85 per cent.

FMCG index was the best performer  with the index gaining an impressive 5.5 per cent. IT index and metal index were the top gainers clocking gains of 2.6 per cent and 2.4 per cent respectively. BSE Bankex was down by 1.07 per cent indicating profit booking in banking stocks.

The global markets tread cautiously as Donald Trump optimism subsides. The volatility in the global equities increased in previous two weeks even as markets showed signs of fatigue. President Trump’s comments and US Fed comments will be keenly watched by  the market participants in the coming days.

Dow Jones Industrial Average slipped 0.38 per cent and S&P 500 slipped 0.10 per cent whereas NASDAQ gained 0.21 per cent. FTSE 100 was the best performing global index; gained more than 2 per cent in past couple of weeks. DAX , CAC 40 and Hang Seng each lost more than 1 per cent.

Gold prices inched up by more than 2 per cent in past one week.  On macro economic data domestically, the CPI-based inflation for April dropped to a multi-year low of 2.99% while retail inflation came in at 5.47%.

The WPI too plunged below its four-month low at 3.85% with easing of prices of food and manufactured products.  Industrial output dropped by 1.2% in February with a slump in manufacturing activity. Meanwhile, the government released trade data at the start of the current week. India’s exports surged 20% to USD 24.63 billion, but imports too grew 49% to USD 37.88 billion, driven by soaring gold imports to the tune of USD 13.24 billion

On the global front, China’s industrial data slowed, while the US data climbed 1%, its highest monthly rise in 3 years