Even as the Indian equity markets scaled fresh peaks, the market capitalisation of companies in the BSE universe touched an all-time peak of Rs 247.30 lakh crore. Also, investors have added a collective Rs 5.76 lakh crore to their wealth through the rally over three days.
The BSE benchmark index, Sensex on August 30, surged 1.36 per cent to cross 56,889 points, a new closing high. The Nifty 50 too rose 1.35 per cent to close Monday at over 16,931. Earlier, on Friday, the Sensex had closed over the 56-k mark for the first time, though it had hit the level in intraday trade on August 18. The BSE index has reportedly gained more than 945 points over three day to touch the current closing peak. The BSE small and midcap indices gained 1.55 and 1.72 per cent, respectively at the close of Monday.
BSE market cap milestones
When the Sensex first grazed the intraday 56k levels on August 18, the market cap of BSE companies had touched Rs 242 lakh crore. It was in May 2021 that the BSE market cap crossed the $3-trillion mark (approximately Rs 218 lakh crore) for the first time. The BSE market cap had reportedly crossed the landmark Rs 200 lakh crore for the first time in February this year. The BSE’s market cap crossed the $2-trillion mark in July 2017, while it had crossed the first $1-trillion mark in 2007. It may be recalled that the BSE market cap had dropped under $1.5 trillion during the market crash of 2020, when the first wave of the Covid-19 pandemic induced selling across global markets.
Reasons for Sensex, m-cap gains
One of the reasons attributed to the stock market gains and consequently, the market cap boost of BSE-listed firms include the accommodative stance taken by the US Federal Reserve. On Monday, all eyes were on the Fed Chairman Jerome Powell who eventually signalled that there was no immediate possibility of an interest rate hike. He however noted that the US could taper the asset purchase programme this year. Following these statements, key global stocks rallied with the Sensex and Nifty seeing 1.36 and 1.35 per cent gains. Asian market indices such as Hang Seng, Nikkei and KOSPI also closed in the green following the US Federal Reserve chairman’s stance.
Another reason for the market touching new highs over the past few days has been the increase in foreign direct investment (FDI) into Indian equity. The FDI into equity numbers doubled in the April to June quarter of FY 2021-22, at $17.57 billion. During the same quarter last year, the FDI inflow into equities was at $6.56 billion, reports suggest. Overall FDI into the country has also risen in the same period touching $22.53 billion, as against $11.84 billion in the year-ago quarter.
Meanwhile, the rupee has also gained strength to touch a near three-month high. On August 30, on the back of the Fed chair’s statement, the rupee rose 0.6 per cent to 73.27 per dollar, the highest rise in the rupee since June 15.
Also, in August, foreign institutional investors (FII) turned net buyers, purchasing over $400 million in Indian equities after they sold $1.7 billion in July. The year-to-date (YTD) net inflows into Indian equities has been a little over $7 billion. Domestic institutional investors (DIIs) have bought nearly Rs 4,600 crore in August.
Looking ahead, the markets are likely to keep a close eye on the GDP growth data for Q1FY22 and other indicators such as the manufacturing Purchasing Managers’ Index (PMI) for August. The pace of vaccinations is also a key factor that will ensure a faster economic revival and also enhance market sentiments.
Even as the BSE Sensex touches new peaks, the market capitalisation of companies in the BSE universe has touched a record Rs 247.30 lakh crore on August 30. The dovish stand of the US Fed chair has reportedly been one of the contributing factors to the market rally, bolstered by FDI inflows into Indian equity.
What is the current market capitalisation of BSE-listed companies?
The market cap of BSE-listed firms has touched an all-time peak of Rs 247 lakh crore on August 30.
When did the BSE first enter the coveted $3-trillion club in terms of market cap?
The BSE market cap touched $3-trillion for the first time in May 2021. It had touched the $2-trillion market cap level in July 2017.
What is the US Federal Reserve stance on hiking interest rates?
The US Federal Reserve Chairperson, while speaking at the annual Jackson Hole symposium, said that the central bank was in no rush to increase interest rates, although it could taper the monthly asset purchase programme.