How PSU and Tech Stocks Helped India Reclaim Its Spot as the World’s 5th Largest Stock Market

Recently, the headlines reported India’s return to the 5th spot as the world’s largest stock market. It briefly lost its position to France in January but has since reclaimed its former spot with a market capitalisation of Rs 259.3 trillion. This is good news for investors and the country since being one of the largest stock markets worldwide will boost GDP and contribute to economic growth.

While this is a positive change, how exactly did India reclaim its spot with the help of PSU and tech stocks? Before discussing that, take a look at how the country became one of the biggest stock markets first:

How India Became One of the Biggest Markets in the World

India is amongst the countries with the highest number of people interested in the stock market. In fact, it’s been dubbed as the second most stock-obsessed country in the world after Singapore. As a result of people’s interest in stock trading, India’s equity market has a market capitalisation of Rs 2.18 trillion for 5,309 companies—one of the biggest in Asia.

Apart from the number of people already investing in stocks, many curious minds are scourging the internet for stock-related knowledge, such as the best stocks to invest in or how to trade. Many Indian traders are also investing in some of the best-performing stocks. Their top choices for stock trading include the biggest names in tech, such as Google, Amazon, and Tesla. These have performed exceptionally well recently, thanks to the rapid digitalisation of businesses.

Moreover, many millennials have contributed to India’s emergence as one of the largest markets because they’re becoming savvier about trading. They’re choosing better trading platforms with beneficial features, such as those that don’t charge swap fees, making them more successful traders.

Now that’s discussed, here’s how India reclaimed its spot with the help of tech stocks and PSUs:

How India Reclaimed Its Spot

Apart from the continuous investment in well-performing tech stocks, India overtook France and reclaimed its spot primarily due to a rebound in Adani Group’s stocks after a short-seller report in the year resulted in a heavy sell-off.

In addition, PSU stocks have jumped due to several factors, helping the stock market grow. For one, Bharat Electronics Ltd (BHEL) rose 7% in intraday trade to Rs 98.45 on the National Stock Exchange after India's Ministry of Defence signed contracts worth Rs 376 billion with them and several other state-run companies.

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This contract with Bharat Electronics is for procuring the Automated Air Defence Control and Reporting System ‘Project Akashteer’. It will help empower the Army’s air defence units with state-of-the-art capability. Consequently, many investors may have been interested in BHEL, urging them to buy its stocks in anticipation of rising prices.

Meanwhile, the National Thermal Power Corporation (NTPC) aimed to sell a 20% stake in its green energy business in the latter part of 2022, expecting to raise up to Rs 30 billion. This move is expected to further attract foreign investors to the Indian market, especially since the renewables sector is amongst the top five industries that foreigners are interested in.

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Finally, Coal India Limited (CIL) announced an 8% increase in major coal grade prices in early June—its first significant hike in five years. Due to this, investors can look forward to a steady price increase in its stocks, motivating them to purchase now to make a profit later on.

Overall, increasing investments in PSU and tech stocks have contributed to India’s return to the 5th spot as the world’s largest stock market. Investors can look forward to retaining this position as the market grows.

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