Since the economic slowdown in March, Indian stocks have added $1.23 trillion, almost doubling the aggregate market value

Even as the economy was hit by the Covid-19 pandemic, India climbed two notches in 2020 to take the eighth spot among the world’s top stock markets. A quick economy recovery helped the country cross the $2.5 trillion market capitalization mark for the first time on December 28.

It followed the previous high of market capitalization at $2.47 trillion in January 2018, said a report by Hindustan Times.

Notably, since the economic slowdown in March due to the Covid-19 induced lockdown, Indian stocks have added $1.23 trillion, almost doubling the aggregate market value.

India’s market capitalization had fallen to $1.3 trillion on 23 March, the lowest since March 2016, according to Bloomberg data quoted in the report.

Investors are expecting a sharp economic recovery in 2021 and companies whose fortunes are tied to the revival are leading the stocks’ rally. A pickup in earnings is expected with the rollout of vaccines.

“This year will be marked by hopes of an early rollout of the
covid-19 vaccine, normalization of activities and unperturbed growth recovery. We expect the year to witness a strong recovery in both the economy and earnings,” the report quoted managing director and chief executive of Kotak Securities Jaideep Hansraj as saying.

In 2020, the Indian markets outperformed many other major markets. India’s market capitalization gains were about 17.4%, one of the highest globally after China’s 48.5%, the US (24%) and Hong Kong (18%), the report noted.

The report further quoted chief investment strategist, Geojit
Financial Services V.K. Vijaykumar as saying, “In 2021, abundant liquidity, low-interest rates and continuing capital flows are likely to support markets. And since valuations are at record highs, markets are vulnerable to corrections.”