Small and mid-caps lead BSE's $1.5 tn market capitalisation run

Written by ENS Economic Bureau | New Delhi | Updated: Jun 11 2014, 13:59pm hrs
BSE mcapOn Tuesday, the market capitalisation of all listed companies at BSE stood at Rs 90,30,346 crore ($1.52 trillion).
The hope factor riding Narendra Modis entry at the Centre was expected to bring a couple of changes -revival in economy and thereby push the GDP and also boost the equity markets.

While the growth numbers will take few years of good governance to reflect, the stock markets have already done their bit. The market capitalisation of all listed entities at the Bombay Stock Exchange that was hovering around $1-trillion mark till a few months ago has risen by 50 per cent to cross the $1.5 trillion mark. On Tuesday, the market capitalisation of all listed companies at BSE stood at Rs 90,30,346 crore ($1.52 trillion).

The BSE market capitalisation had fallen below the $1-trillion mark in August 2013 following a sharp depreciation in rupee and correction in the equity markets. It has, however, witnessed a sustained revival since then and over the last ten months the market cap has revived.

The recent rally in the markets has contributed most to it. As the markets were ripe with expectations that BJP-led NDA coalition will come close to getting the majority, there was a spurt in the markets over the last six weeks and the gains further precipitated after the results on May 16.

While the total market capitalisation of BSE rose by 20.5 per cent or 15.35 lakh crore since April 30, 2014, the benchmark Sensex (30 companies) that makes up for close to 48 per cent of the BSE market capitalisation contributed only one-third of those gains as it rose by only 14 per cent during that period. A significant two-thirds of this rise came from companies other than those that form the benchmark index.

Mid-cap and small-cap companies contributed significantly to it as the two indices rose by 26 and 34 per cent, respectively, during that period.

While the market capitalisation of category A stocks rose by 19 per cent, that of the category B stocks rose by 27 per cent during this period. As a result of this surge the share of category B stocks in the BSE market capitalisation has grown.

As sentiments changed, the rise in the stocks and market capitalisation has been contributed significantly by the foreign institutional investors who have supported the market and reposed their faith in the long term story India growth story. They have pumped in a net of Rs 49,571 crore in the Indian equities in the calendar 2014 thereby giving the required impetus to the markets.

Meanwhile, in volatile trade, the Sensex on Tuesday came off new life-time high of 25,711 hit in morning trade but managed to end with a slim 3.48-point rise at a fresh closing peak of 25,583.69 helped by rise in IT and pharma shares.

Tracking firm Asian trends, the BSE Sensex resumed strong and immediately improved further to a high of 25,711.11- a new historic intra-day high.

This was on the back of sustained buying by foreign funds and retail investors the government on Monday promised investor-friendly reforms and measures to revive countrys economic growth. Sensex, however, later succumbed to selling pressure to hit days low of 25,347.33 on growing fears over monsoon. It later saw some recovery to end at a fresh closing peak of 25,583.69, up 3.48 points or 0.01 per cent.