Investor wealth on BSE reclaims $5-trillion mark after three months

The Bombay Stock Exchange (BSE) has witnessed a significant resurgence in investor wealth, with its total market capitalisation crossing the $5 trillion mark for the first time in three months. This milestone, last achieved on January 20, positions India among the few countries with such a high market cap, alongside the US, China, Japan, and Hong Kong. The recovery comes after a dip to $4.5 trillion on April 7, propelled by impressive gains across large-cap, mid-cap, small-cap, and public sector undertaking (PSU) stocks. The market upswing has been largely attributed to positive trade developments and expanded tariff exemptions, with the US pausing reciprocal tariffs earlier this month.

Since April 7, the Sensex and Nifty indices have each risen by nearly 9%, while the BSE Mid and Smallcap indices recorded gains of 9.4% and 10.6%, respectively. The Nifty Bank surged by 11%, and the BSE PSU Index climbed 10% over the same period. 

Investors are keenly observing ongoing trade talks between India and the US, particularly during the visit of US Vice President JD Vance, who is expected to discuss trade matters with Prime Minister Narendra Modi. Falling crude oil prices have also eased inflationary pressures, contributing to an improved trade balance.

Despite the rally, the Sensex and Nifty still trail over 7% below their 52-week highs, with the BSE Mid and Smallcap indices remaining 13.8% and 15.8% off their peaks. 

Domestic optimism is further supported by early corporate earnings projections indicating 2-3% growth for the June quarter and renewed foreign investor interest, with net inflows surpassing $1 billion in recent sessions. However, analysts caution that while the market recovery is promising, the indices have yet to reach their previous peaks, reflecting cautious investor sentiment.