New Delhi: The Economic Survey, which tabled in Parliament on Tuesday, said that the ongoing financial and regulatory reforms for the capital market, together with accelerated economic growth and macroeconomic stability, sustained the ‘investors' confidence in the country's capital market.
Sustained investor interest will keep alive the buoyancy in stock market, which peaked to 14,724 points on February, helping India catch up with mature markets in terms of market capitalisation to GDP ratio.
With a market capitalisation of 91.5 per cent of GDP compared favourably not only with the emerging markets but also with economies like Japan 96 per cent and South Korea 94.1 per cent and shows signs of catching up with some of the mature economies.
The market value of Indian stocks was second highest among all emerging markets, surpassing those of markets like Thailand, Malaysia, South Korea and Taiwan at the end of 2006.
In comparison, China's market cap was just 33.3 per cent of GDP at the end of 2006.
Market capital in terms of GDP indicates the relative size of capital market, besides investor confidence and discounted future earnings of corporate sector.
The survey reported that improved investor awareness and expanding equity cult among the small savers appear to augur well for buoyant stock markets.
The expectations of higher corporate investment and earnings, robust GDP growth and government's commitment to carry forward economic reforms are also expected to scale up FII interest to retain India as one of the preferred destinations.
After scaling new peaks year after year since 2003, the benchmark 30-share index, Sensex, rallied from a low of 8,929 in June to an all-time high of 14,274 in February.
The survey said that the journey from 13,000 to 14,000 mark that took just 26 trading sessions was one of the fastest ever 1,000-point rallies.
With agency inputs
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