India topped Hong Kong on January 22 to become the world’s fourth-largest stock market by market capitalization. India’s market capitalization stood at $4.33 trillion on Tuesday, compared with $4.29 trillion in Hong Kong, according to Bloomberg data. Currently, the largest market in the world is the US with an mcap of $50.86 trillion, followed by China with an mcap of $8.44 trillion and Japan with $6.36 trillion.
Indian stocks hit new highs in 2023 on bullish investors and increased domestic participation. However, the recent correction followed lower-than-expected earnings at HDFC Bank. Analysts believe that an expected rate cut by global central banks in 2024 could boost investor confidence and further fuel India’s market recovery. Investors now await the budget announcement on February 1.
In 2023, the Sensex and Nifty advanced 18.8 percent and 20 percent, respectively, while the BSE MidCap and SmallCap jumped 45.5 percent and 47.5 percent, respectively. Among the top gainers, Tata Motors jumped 101 percent, Bajaj Auto advanced 88 percent, NTPC rose 87 percent, L&T gained 69 percent, while Coal India rose 67 percent.
Hong Kong markets are falling due to China’s economic slowdown and pressure on US investors to sell their exposure to Chinese companies. This contrasts with the strong performance of the US market, where inflation eased and the labor market remained strong. The S&P 500 rose 25% in 2023, highlighting the divergent paths of the world’s two largest economies.
Global investors initially expected China’s economy to recover after strict pandemic measures, but when borders fully open in 2024, households have been hesitant to spend. This reluctance, coupled with a stagnant economy and China’s property crisis, led to a downturn that hit Hong Kong. Most of the Chinese property developers who over-expanded in Hong Kong and borrowed from foreign investors now face the prospect of collapse.
