India increases share in world m-cap

ET Intelligence Group: Relatively attractive earnings prospects amid the reopening of global trade and waning pressure on corporate performance as the second wave of the pandemic flattens out have lifted India’s share of the world market capitalisation.

India accounted for 2.60% of the world market capitalisation in June 2021, compared with the long-term average of 2.45%, according to Bloomberg data. The share had dropped to 2.05% in May 2020 when the first wave of coronavirus jolted global equity markets. Since then, it has been rising.

India’s market-cap rose 66% in one year to $3.02 trillion last month, outpacing the 44% growth in global market-cap. In fact, India has been outperforming the global growth in market-cap for five years, at 14.7% annually against 13.25%.


Indian equities delivered a return of 49% in the last one year — one of the highest among the major markets. For the past three months, India was the second best with a return of 7.14%, behind Brazil’s 8.60%.

Emerging market’s share in the total world capitalisation has remained in the range of 23-24% in the last one year due to equity underperformance, but India is an outlier. Since the beginning of the year, the MSCI India — a benchmark used by global fund managers to evaluate Indian equity performance — delivered 7.7% and 1.1% compared with the MSCI EM and MSCI World indices, respectively. Indian equities are now trading at a 55% premium to EM counterparts, compared with the long-term average of 41%.
Earnings of the Nifty50 companies grew 23% in the last fiscal year, the best in the past decade, according to Motilal Oswal. The forecast for the ongoing fiscal year too appears encouraging.

The current reading of the Nifty50 consensus earnings per share suggests implied earnings growth of 40%. The consensus earnings per share of the Nifty50 was upgraded for the third quarter in row after the March 2021 earnings. Prior to these, the forecast was cut for 23 consecutive quarters.