India Set to Become Third Largest Economy by 2027, Market Capitalization to Hit $10 Trillion by 2030: Jefferies
India is projected to become the third largest economy by 2027, with its market capitalization expected to reach a staggering $10 trillion by 2030, according to a report by global brokerage house Jefferies. Currently, India ranks as the fifth-largest economy in terms of market cap, valued at $4.5 trillion. However, despite this growth, India’s weight in global indices remains low at only 1.6 percent.
Jefferies predicts that with market returns aligning with the past 15-20 year history and new listings, India will eventually become a market too significant for global investors to ignore. Key factors contributing to this optimistic outlook include India’s vibrant democracy, the consistent policies of successive governments, excellent international relations, a rising startup ecosystem, and India becoming a hub for services exports.
India’s thriving startup environment, fueled by affordable data rates and governmental support for digital infrastructure, has resulted in the nation becoming home to 111 unicorns. This exemplifies the country’s potential as a breeding ground for innovative startups. Furthermore, India’s robust corporate sector, which prioritizes Return on Equity (RoE), and its strong track record of market returns position it well for investor interest.
Jefferies also notes India’s growing appeal to international investors, attributing it to strong earnings growth, superior market returns, and an increasingly significant weight in global markets. The Indian market has already attracted an impressive $20 billion in equity flows in 2023, with structural flows from retail to the equity markets estimated at $30-35 billion per annum. This, coupled with the preference for long-term savings in equities, positions India favorably for sustained investment growth.
Over the next four years, India’s GDP is expected to reach $5 trillion, surpassing the economies of Japan and Germany to become the third largest economy. This growth is attributed to demographics, improvements in institutional strength, and governance. India’s solid economic performance, with a projected growth rate of 6 percent over the next five years, stands out significantly against the anticipated decline in growth for most large economies.
India’s journey towards becoming a global economic powerhouse seems imminent, and as its market cap skyrockets and its economy flourishes, global investors simply cannot afford to ignore the opportunities presented by the Indian market.
Analyst comment
Positive news: India is projected to become the third largest economy by 2027 and its market capitalization is expected to reach $10 trillion by 2030. Factors contributing to this optimistic outlook include India’s vibrant democracy, consistent policies, excellent international relations, a thriving startup ecosystem, and becoming a hub for services exports. Jefferies predicts India will become a market too significant for global investors to ignore.
Analysis: With India’s robust corporate sector, strong track record of market returns, and growing appeal to international investors, the Indian market is well-positioned for sustained investment growth. Over the next four years, India’s GDP is expected to surpass Japan and Germany, and its solid economic performance stands out against the anticipated decline in growth for most large economies. The market capitalization of India is set to skyrocket, presenting opportunities that global investors cannot afford to ignore.
