Indian Stock Market Poised To Become World's 5th Largest, Overtaking UK's: Report

The Indian equity market is poised to overtake the United Kingdom's in terms of overall value to become the fifth largest market in the world. 

What Happened: India's market capitalization has increased 36% this year, fueled mainly by retail investors and record low interests rates, meaning its market capitalization currently stands at $3.46 trillion, according to a report by Bloomberg. The U.K.'s equity market on the other hand saw an increase of about 9% resulting in a capitalization of $3.59 trillion, though this gap is considerably larger if secondary listings and depositary receipts are factored in, the publication noted.

While the two markets are zeroing in on size, India is being more associated with its blossoming technology sector and growth potential outweighs that of the U.K.'s, given the latter's struggles with Brexit, Bloomberg noted.

In fact, Silicon Valley's tech giants have been flocking to the Indian economy, with Amazon AMZN pledging $1 billion, Facebook FB investing $5.7 billion in local telecom giant Jio Platforms and Google GOOGL committing a $10 billion investment to be made over the course of 5 to 7 years.

The Bloomberg report notes that India is set to benefit from the recent indifferent sentiment directed towards Chinese Equities. 

"India is seen as an attractive domestic stock market with good longer-term growth potential from an immature economy, and a stable and reformist political base is helpful in realizing this potential,” said Roger Jones, head of equities at London and Capital Asset Management.

"On the other hand, the U.K. has been out of favor since the Brexit referendum outcome," he added.

India's S&P BSE SENSEX has gained over a 130% since its low during the early days of the COVID-19 pandemic in March 2020, Bloomberg noted. The equities index has also been the best performing of the major national markets tracked by Bloomberg.