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Modi Factor Helps Stock Market Cap Cross $1.5 Trillion

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Modi Factor Helps Stock Market Cap Cross $1.5 Trillion
Mumbai: 

The combined market capitalisation of India's publicly listed companies crossed $1.5 trillion or Rs 88.5 lakh crore on Monday, as billions of dollars poured into India in the wake of Narendra Modi's stunning election victory last month.

Mr Modi led the BJP to India's biggest election win for 30 years, pledging sweeping reform to create jobs and boost an economy growing below 5 per cent - its slowest in more than a decade.

Strong foreign buying has pushed both the Sensex and the broader Nifty up by just over 20 per cent so far this year, posting a series of record highs - the latest on Monday - and far outperforming a 5 per cent gain in the MSCI Asia-Pacific index excluding Japan.

Foreign investors have bought a net $8.55 billion or nearly Rs 50,000 crore so far this year, with $3.31 billion, or Rs 19,500 crore, coming since the beginning of May.

At $1.52 trillion, or Rs 90 lakh crore, as of Monday's close, the market value of the National Stock Exchange and the smaller Bombay Stock Exchange makes India the second largest among emerging markets in Asia, ahead of South Korea, but still below the market cap of $2.4 trillion, or Rs 141 lakh crore, for Shanghai-listed shares, according to Thomson Reuters data.

India's market capitalisation, however, remains below a peak average of $1.82 trillion, or Rs 107 lakh crore, hit in December 2007, according to data from BSE.

"This is an excellent time to invest, and our belief is that we are in a long-term bull market that is likely to play out in the next 7-10 years," Vijai Mantri, chief excutive of Pramerica Asset Management said.

"Along with the strong foreign flows we are also beginning to see domestic flows returning to the market, which is likely to support the rally."

Shares of state-run companies, seen as desperately in need of reform, have rallied the most, with the CNX Public Sector Enterprises Index gaining 22.3 per cent since May 15th.

Other gainers include domestic oriented sectors such as infrastructure and construction, along with interest rate sensitive sectors such as banking and automobile company stocks. ($1 =59 rupees)

Copyright: Thomson Reuters 2014

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