Last week, eight of the top ten most valuable firms added a total of Rs. 2,32,800.35 crore to their market capitalisation, with RIL and TCS emerging as the largest gainers. The 30-share BSE benchmark rose 1,293.48 points, or 2.20 percent, last week. On Friday, the benchmark surpassed the 60,000 mark.
RIL’s market value increased by Rs 93,823.76 crore to Rs 16,93,170.17 crore. TCS increased its value by Rs 76,200.46 crore, bringing it to Rs 14,55,687.69 crore.
Infosys’ value increased by Rs 24,857.35 crore to Rs 7,31,107.12 crore, while Bajaj Finance’s value increased by Rs 12,913.91 crore to Rs 4,66,940.59 crore. HDFC Bank’s market capitalisation increased by Rs 10,881.09 crore to Rs 8,87,210.54 crore.
ICICI Bank increased its valuation by Rs 7,403.24 crore to Rs 4,87,388.37 crore. SBI’s market capitalisation increased by Rs 5,310.14 crore to Rs 4,08,479.47 crore, while HDFC’s increased by Rs 1,410.4 crore to Rs 4,91,841.14 crore.
HUL, on the other hand, saw its value plummet by Rs 14,614.46 crore to Rs 6,20,362.58 crore. The market value of Kotak Mahindra Bank fell by Rs 11,697.38 crore to Rs 3,83,866.29 crore.
Forecasts of Goldman Sachs
‘Indian equities: Digital transformation as private becomes public,’ according to a Goldman Sachs analysis, is counting on these digital IPOs and enterprises to drive market cap expansion in the years ahead. According to the estimate, roughly 150 private companies could go public in the next two to three years, adding $400 billion to the market capitalisation. India’s market capitalisation is expected to reach $5 trillion by 2024, making it the world’s fifth largest market.
According to the report’s authors, the Indian market is dominated by old-economy industries, with Indian companies’ listing ages reaching 20 years. The inclusion of new economy equities might increase their participation in the market from 5% to 16%. Because these equities trade at far higher valuations and have the potential for faster growth, the market capitalisation of Indian markets will rise, bringing the total market capitalisation to almost $5 trillion.
Economic Outlines are Shifting
The aforementioned reasons have the potential to make the Goldman Sachs report’s forecasts come true. However, the deadline specified by the authors appears to be difficult to meet.
They’re forgetting that the present IPO rush is also a result of secondary market conditions. If the secondary market undergoes a dramatic downturn, the interest for IPOs will wane, and the offers now in the pipeline will be postponed until market circumstances improve. As a result, obtaining a market capitalisation of $400 billion through IPOs in the next two years appears to be a difficult order.
However, the pandemic’s structural shift in investor quality, as well as altering consumer behaviour, will cause new economy companies to develop quickly and approach the stock market for listing, boosting their market share over time. Higher valuation multiples may become the norm for Indian shares, owing to a shift in investor behaviour as well as the types of companies listed.
What exactly is market capitalisation, and why does it matter?
Market capitalisation helps investors to assess a company’s worth based on public perception. The “larger” the company is, the higher the value. Public corporations are also divided into three categories based on their size: small-cap, mid-cap, and large-cap.
What impact does a company’s market capitalisation have?
Because market cap is simply the company’s total outstanding shares multiplied by its share price, it has no direct impact on its share price. However, because market capitalisation reflects a company’s perceived value in the eyes of investors, the share price might rise with time.