market cap: India’s global market cap share at all-time high

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After becoming the world’s fifth-largest economy, India is now the fifth-biggest equity market as well. While global equities collapsed under the weight of two Black Swan events — the Covid pandemic and the Ukraine war – the Indian share market held firm in 2022.

The relative outperformance has propelled India’s share in global market cap to an all-time high of 3.5%, rebounding from a low of 2.05% on May 19, 2020, in the aftermath of the pandemic-triggered collapse in share prices.

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  • India’s strong economic growth makes country attractive
  • Indian markets decoupled from other markets in the short term
  • Strong FII flows driving markets since August
  • MSCI India index has outperformed the MSCI Emerging Mkt index by 27% in the past 12 mths

WHAT IT MEANS

  • Rise in share because of relative performance
  • In absolute terms, Indian market has been almost flat
  • High valuations mean Indian market more at risk in case of adverse events
  • High US interest rates and strong $ key risks

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