The Indian market is no longer part of the coveted $3-trillion market capitalization club.
The latest rout in the market has seen its value slip to $2.99 trillion, the lowest in nearly 13 months. From the peak of $3.67 trillion in January, India’s market cap has eroded by $676 billion amid rising bond yields and a record-breaking sell-off by overseas investors, Business Standard reported.
Earlier this year, India had entered the top five in the m-cap league. At present, India is ranked sixth, behind Saudi Arabia, which has benefited from rising oil prices this year. India first crossed the $3-trillion market-cap mark on May 31, 2021, and stayed there for over a year.
However, that changed after runaway inflation led the US Federal Reserve and other global central banks to aggressively tighten monetary policy. This has triggered fears of a recession, prompting investors to flee risky assets. The world m-cap has declined nearly 20 per cent on a year-to-date basis to $98.5 trillion. At its peak, the world’s m-cap had climbed to $122.5 trillion, the report said.
The US Federal Reserve raised rates by 75 bps on Wednesday, which is its largest interest rate increase in more than a quarter of a century, to stem a surge in inflation.
The Fed also significantly cut its outlook for 2022 economic growth to 1.7 per cent, down from 2.8 per cent in March.
Further, the Bank of England too raised interest rates by a quarter of a percentage point on Thursday.
Meanwhile, India is not the only country to move out of the $3-trillion m-cap club, however. The market cap of the UK, Canada, and France too has dropped below this milestone. Germany’s market cap is on the verge of slipping below $2 trillion with the prolonged war between Russia and Ukraine battering European stocks and disrupting supply chains.
Among the top 15 world markets, Sweden had the biggest m-cap erosion in percentage terms (34.6 per cent), followed by Germany (25.5 per cent), France (24.6 per cent), and the US (23.4 per cent). Meanwhile, Saudi Arabia is the only market to have seen an increase in its market value this year, rising 15 per cent.