The Indian stock market has overtaken Hong Kong’s to become the world’s fourth-largest equity market by market capitalisation for the first time on January 22, according to a Bloomberg report. The US, China, and Japan are the top three stock markets succeeding India.

India also became the fastest-growing major economy with a firm GDP growth forecast, manageable inflation levels and central government political stability.

As per Bloomberg’s data, as of Monday’s close, the combined value of shares listed on Indian exchanges reached $4.33 trillion versus $4.29 trillion for Hong Kong. 

India’s stock market capitalisation crossed US$ 4 trillion for the first time on December 5, 2023. The market capitalisation of Hong Kong markets has slumped by more than $6 trillion since its peak in 2021. 

In 2023, domestic indices Sensex and Nifty gained 18.8% and 20%, respectively. In contrast, Hong Kong’s benchmark Hang Seng Index declined 13% over the past year.

The rally in the Indian stock market can be attributed to the strong inflow of funds from foreign portfolio investors (FPIs) and foreign institutional investors (FIIs), a rapidly growing retail investor base, strong corporate earnings and robust domestic macroeconomic fundamentals. 

Indian equity markets have gained for eight consecutive years, whereas Hong Kong’s Heng Seng declined for the fourth year straight, while the Shanghai Stock Exchange declined for the second successive year. 

Bloomberg report stated that China’s stringent anti-COVID-19 curbs, regulatory crackdowns on corporations, property crisis and tensions with the West have all combined to erode China’s appeal as the world’s growth engine.