Market capitalisation of BSE-listed stocks hits record high. Should you follow the current?

NEW DELHI: With midcap and smallcap stocks leading the charge amid a rush of foreign and local capital in the equity market, the combined market capitalisation (m-cap) of all BSE-listed stocks today hit a lifetime record high of Rs 292 lakh crore.

BSE data shows that the previous record high in terms of m-cap was on December 14 last year at Rs 291.25 lakh crore on a closing basis.

In the morning session, the Sensex crossed the 63,300 mark only to give up gains later on amid selling in banks, financials, and IT stocks.


Having rallied around 10% in the last 3 months, both Sensex and Nifty are now playing hide and seek with their lifetime high levels as hopes of pivot by central banks are being countered by a tough global macro environment.

The broader market has been outperforming with Nifty Midcap and Nifty Smallcap indices rallying 16% and 17%, respectively, in the last 3 months.

With FIIs having poured in Rs 66,730 crore into Indian equities so far in the financial year 2023-24, global brokerage house Goldman Sachs has a target of 20,000 for Nifty by end-March, implying an upside of almost 7% from current levels.

The headline index is currently trading at 18x 1-year forward EPS which is at a 13.5% discount to the 10-year average of 20.8x.

Most investors find India in a sweet spot given the 6.5% GDP forecast for FY24 (highest globally), pause in repo rates, declining inflation, revival in industrial capex, and strong infra push by the government.

"We value Nifty at a 12% discount to 10-year average PE (20.8x) with March 25 EPS of Rs 1,148 and arrive at a 12-month target of 21,013 (20,551 based on 18.2x March 25 EPS of Rs 1,128 earlier)," said Amnish Agarwal of Prabhudas Lilladher.

The domestic brokerage firm is optimistic about auto, banks, capital goods, hospitals, discretionary consumption, and building materials.

In FY23, domestic earnings growth was strong at 30%, while foreign-related earnings declined by 14%.

"The headline Nifty earnings growth projection of 20% for FY24 (FY23: 10%) appears high, but a slowdown in domestic earnings growth from 30% in FY23 to 19% in FY24 is already built-in. Margin expansion is an earnings driver and has added 5 ppts to FY24 earnings growth," global brokerage firm Jefferies said while giving a bullish stance on domestic cyclical - financials, realty, and industrials.

While reshuffling its portfolio after the recent rally, Prabhudas has added HDFC Bank, Maruti, Siemens, Sumitomo Chemicals, Apar Industries, and Aster DM Health to the conviction list and removed ABB, Apollo Hospitals, BOB, BEL, Bharti Airtel, Havells, M&M, PI Inds and Max Health.