After four straight months of decline, finally, India’s market cap finally recovered and increased by 9.4% in the month of December, leaving all the top ten equity markets in the world. This is the biggest and strongest surge in the Indian market cap in the past three years. In December, the cumulative market cap stood at $4.93 trillion, the highest since May 2021.
What made the Market cap surge in December?
This rise in the market cap can be primarily attributed to the return of foreign investments in the Indian equity market after the massive selloff seen during October and November 2024. The foreign investors invested around $2.37 billion in the equity market in India during this month until now against the sluggish trend of October and November when equities worth $11.2 billion and $2.57 billion were sold off.
Even though the foreign investments rolled into the equity market, the domestic indices such as Sensex and Nifty were offering mixed signals triggered by different domestic and geopolitical issues. Both the broad market equity indices declined around 1.7% during the month. Even the BSE Midcap index only rose by 0.5% while the BSE smallcap declined marginally by 0.3% during the month until now.
Another major reason for this growth of India’s market cap is the growth story of the nation is holding strong amidst all odds. Here is how the top ten economies’ market cap changed in December 2024:
| Countries | MoM Change (%) | Market Capitalization ($ Trillion) |
| India | 9.4 | 4.93 |
| Hong Kong | 4.13 | 5.57 |
| Taiwan | 3.27 | 2.57 |
| Saudi Arabia | 2.42 | 2.72 |
| France | 0.20 | 2.93 |
| US | -0.42 | 63.37 |
| China | -0.55 | 10.17 |
| Germany | -1.22 | 2.40 |
| United Kingdom | -2.84 | 3.07 |
| Japan | -2.89 | 6.28 |
Global Market Cap Scenario
India outperformed all other top global economies with its growth in market cap for the month of December on an MoM basis. If you look at the above table, you can see that India even surpassed the market cap growth rate of the largest equity market, which is the US. After seven consecutive months of rise in market cap, the US market witnessed a decline in its market cap this month. On the other hand, the second-largest equity market, China witnessed a decline in its market cap for the fifth time in a row.
While the major economies like the US, UK, South Korea, and Germany witnessed a fall in their market cap, the emerging economies such as Saudi Arabia, and Taiwan saw market capitalization increase in December.
Overcoming the Challenges
This fiscal started on a slower note, with Lok Sabha Elections, geopolitical turmoil, and recession fear looming around globally. However, Indian markets were comparatively stable and witnessed growth. Global market cues were mixed and domestic market cues were weak with lower-than-expected corporate earnings, sluggish economic growth, deferred government spending, inflationary pressure, and rigid liquidity quotient keeping the market on its toes. However, these challenges could not stop the market, which is reflected in December’s rise in the market cap.
Market Cap Outlook
Analysts and experts believe Indian markets to remain stable, and not highly affected by global shocks, which can include trade wars between major nations like US and China. The GDP may decline to 6.3% in 2025 owing to fiscal consolidation, and sluggish credit growth. However, the long-term growth story of the nation is on track. Rate cuts will be a little delayed, but by mid of FY26, a cut of 50 bps can be seen as expected by the market experts. Having said that, analysts predict that retail loan growth to remain muted in the upcoming fiscal.
Source: MoneyControl
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