Indian Stock Markets Surge with a 9.4% Gain in March
India has emerged as the top-performing equity market among the world’s ten largest economies, recording its strongest monthly gain in four years. The total market capitalisation of all listed companies on the Bombay Stock Exchange (BSE) surged 9.4% in dollar terms in March, following a period of five consecutive months of decline.
According to exchange data, the total market capitalisation of listed firms on the BSE now stands at approximately $4.8 trillion, a sharp increase from $4.39 trillion at the end of February. This marks the highest monthly rise since May 2021, reflecting renewed investor confidence and strong market fundamentals.
India Outperforms Global Peers in Market Capitalisation Growth
India’s 9.4% rally was the highest among the world’s top 10 equity markets. Other key global markets saw comparatively moderate gains:
Germany recorded a 5.64% increase, with its total market valuation exceeding $2.81 trillion.
Japan and Hong Kong followed with 4.9% and 4% gains, respectively.
France, China, and the UK reported growth of 2.7%, 2.2%, and 2%, respectively.
Canada saw a marginal increase of 0.44%, maintaining a steady uptrend.
However, not all major markets shared India’s bullish trend. The United States, the world’s largest stock market with a market capitalisation of $59.13 trillion, declined by 3.7%. Meanwhile, Saudi Arabia posted the steepest fall among top markets, with a 4.4% decline in market value.
Benchmark Indices and Broader Markets Drive the Rally
The sharp rise in India’s stock market was driven by strong performances across benchmark and broader indices.
The BSE Sensex and NSE Nifty recorded 5% gains in March.
Broader indices outperformed, with the BSE MidCap index rising by 8.4% and the BSE SmallCap index climbing by 9.8%.
This broad-based rally indicates strong investor participation across all market segments, with small and mid-cap stocks leading the charge.
Factors Driving India’s Market Surge
The Indian stock market’s exceptional performance in March can be attributed to several key factors:
Value Buying and Market Rebound
After five months of continuous decline, investors engaged in aggressive value buying, seeking attractive opportunities in undervalued stocks.
Large institutional players, including mutual funds and foreign portfolio investors (FPIs), contributed to the market uptrend.
Interest Rate Cut Expectations
The Reserve Bank of India (RBI) is widely expected to cut interest rates in the upcoming April monetary policy review.
The US Federal Reserve’s indication of two potential rate cuts in 2025 has further strengthened global market sentiment, indirectly benefiting Indian equities.
Easing Inflationary Pressures
India’s Consumer Price Index (CPI) inflation remained below the RBI’s medium-term target of 4%, fueling optimism for an interest rate cut.
Lower inflation has improved the outlook for corporate earnings and economic growth, attracting fresh investments.
Liquidity Injection by RBI
Since late 2024, the RBI has injected approximately ₹3 lakh crore in durable liquidity through variable rate repo (VRR) auctions, swaps, and open market operations (OMOs).
These measures have eased liquidity constraints in the banking system, ensuring ample capital availability for stock market investments.
Investor Sentiment and Market Outlook
Market analysts remain optimistic but caution that the current rally could witness some corrections in the near term.
According to Gaurang Shah, Senior Vice President at Geojit Financial Services, Indian markets have gained over 1,100 points on the Nifty and 3,500 points on the Sensex since March began. As the financial year-end approaches, investors are closely watching developments in global trade policies, particularly potential tariff changes in the US.
Shah advised:
Short-term traders may consider booking profits, given the sharp rally in recent weeks.
Long-term investors should remain invested, as further market upside is possible if corporate earnings remain strong in the fourth quarter.
Prudent investment strategies should be driven by fundamental analysis rather than speculative moves based on market momentum.
