Mark Cap at BSE reaches $5 trillion milestone amid pre-poll result volatility.
By MAHAVIR LUNAWAT
The market capitalization of BSE-listed companies recently reached a historic milestone, surpassing $5 trillion for the first time. This remarkable achievement is driven by a significant growth in core sectors, positive economic indicators, a mid and small-cap rally, a positive long-term outlook, foreign investment trends, and strong investor confidence.
Additionally, the surge in IPO activity is fuelled by soaring Indian stocks, robust economic growth, and corporate earnings consistently outpacing expectations, inspiring more companies to go public.
As a result, IPO market has seen a significant boost, with large corporate houses and new –age businesses like Tata Capital, Hexaware, Ola Electric, and Swiggy gearing up for their public market debuts in 2024-25.
Indian Market Update: Indian market extended further on upside and made a life time high of around 22840.75 levels so far in this rally. We may see volatility in the market in short term ahead of election Results.
The Indian economy is reflecting promising signs of growth and resilience. International organizations like United Nations, International Monetary Fund & Asian development bank has raised India’s economic growth forecast. The UN has adjusted India’s 2024 growth forecast from 6.2% to 6.9%, attributing it to robust domestic economic activity driven by substantial public investment and resilient private consumption.
These revisions align with optimistic projections by the IMF and ADB, anticipating India’s growth at 6.8% and 7% for FY25, respectively. Arvind Panagariya, Chairman of the 16th Finance Commission, has expressed confidence in India’s growth trajectory, suggesting that India could become the third largest economy globally by 2027-28 if it continues to push ahead with the growth momentum witnessed in the last two decades.
The Indian economy likely grew a better-than-expected 6.8% in the last quarter of FY24 as per the median forecast of a poll of 15 economists, propelled by strong growth momentum and strengthening demand. The strong print could lift overall GDP growth for the FY24 to 7.8%.
This exceeds the government’s initial estimate of 7.6%. Increased government expenditure, particularly in public investment, and an uptick in services also play roles in bolstering growth. India’s Forex Reserve stood at $644 BN as on 10th May,2024
The RBI has approved a record-high surplus transfer of Rs 2.11 lakh crores to the government for FY 2023-24, driven by increased forex income. This surplus, higher than expected, will reflect in the government’s accounts in FY 2025, easing fiscal pressures.
India’s southwest monsoon is expected to reach Kerala on June 1, according to private weather forecaster Skymet. Earlier IMD also said that El Nino, which caused erratic rainfall last year is expected to transition to ENSO-neutral by April-June 2024, with increasing odds of La Nina developing in June-August 2024.
While El Nino caused erratic and less than normal rainfall in the country, La Nina conditions are known to cause good rains. India’s achievement towards market capitalization sees a significant milestone as the total market capitalization of all stocks listed on the Bombay Stock Exchange (BSE) briefly surpasses $5 trillion for the first time, making India the fifth country after US, China, Japan & Hong Kong to achieve this milestone.
Global Market Update:
US market trend remains positive and extended further and made a life time high across all indices. Federal Reserve officials have expressed their views on potential interest rate cuts decision. Atlanta Fed President Bostic emphasized that the future “steady state” for US interest rates may be higher than recent levels, possibly resembling those seen in the 1990s. He reiterated his belief that only one interest rate reduction may be warranted in 2024.
Vice Chair for Supervision Michael Barr echoed similar sentiments, emphasizing the need to maintain steady interest rates, particularly in light of “disappointing” CPI data from the first quarter.
Fed Governor Christopher Waller on the other hand, initially stated a need for more favorable data before considering rate cuts but later expressed a preference for a “sequence of cuts.” Overall, Fed policymakers continue to monitor inflation closely and expect it to return to the 2% target over the medium term, although recent data has not increased their confidence in progress toward this goal. They remain prepared to adjust policy rates further if inflation risks materialize.
Brent crude witnessed profit booking further which is trading around $81 per barrel. The latest FOMC minutes suggested a prolonged period of rise in Interest rate and willingness among members to tighten policy further in the event of inflation surges, raising concerns about potential impacts on energy demand in the world’s leading oil consumer.
Additionally, US crude inventories unexpectedly increased by 1.825 million barrels last week, contrary to market expectations of a decline, indicating possible weaker demand or oversupply.
While Geo-political tension continues to give support to crude oil prices at lower levels in near term, the market participants are also closely eyeing upcoming OPEC+ meeting on June 1 where key oil producers are expected to extend output cuts to prevent a global oversupply and stabilize prices. (The author is Managing Director, Pantomath Capital Advisors Pvt. Ltd. – A Leading Mid-Market Investment Bank)
