India's Stock Market Revolution

India is on the way to a 45-trillion stock market, fuelled by rising investor participation, technological advancements, and economic growth

- SUNDARARAMAN RAMAMURTHY

A COMBINATION OF policy foresight, technological advancements, and a youthful demography is set to transform India’s stock market by 2047. This growth is happening on the back of significant expansion that is being witnessed over the past two decades, largely driven by increased participation from domestic institutional investors (DIIs) and retail investors in the post-Covid period. To give an example, the market valuation of BSE-listed firms has surged 45 times, reaching over `450 lakh crore ($5 trillion) as of August 2024, compared to `10 lakh crore in 2003.

If the economy continues to grow steadily, India’s equity market could sustain this upward trajectory. Projections indicate that the Indian economy could reach $30-35 trillion by 2047, assuming an 8-9% growth rate, potentially elevating India to developed economy status. With a market cap to GDP ratio of 1.5x, the market capitalisation of BSE-listed firms could hit $45 trillion by 2047. Even with a more conservative growth rate of 7-7.5%, the economy could be valued at $15-20 trillion, quadrupling the market cap over the next 23 years.