India's equity market recorded the biggest one-month increase among the global top ten largest equity markets in March, climbing 9.4% in terms of dollars, latest data from the stock exchange show. This was the strongest bounce in four years after five consecutive months of falls.
The market capitalization of all the listed firms on the Bombay Stock Exchange (BSE) rose to around $4.8 trillion from around $4.39 trillion as of the end of February. This is the biggest monthly rise since May 2021. India led other large global markets, followed by Germany, which rose by 5.64% in market capitalization to over $2.81 trillion.
Other markets like Hong Kong and Japan also logged 4.9% and 4%, respectively. There were modest gains for France, the United Kingdom, and Canada. Meanwhile, the world's biggest equity market, the United States, logged a decline of 3.7%, while Saudi Arabia lost 4.4%.
Indian equity benchmarks Sensex and Nifty each gained 5% in March. The BSE MidCap and SmallCap indices, broader in scope, recorded even more steep increases at 8.4% and 9.8%, respectively.
The rally was mainly due to value buying and increasing hopes that the Reserve Bank of India (RBI) would lower interest rates in the near future. Investor confidence was also supported after the US Federal Reserve suggested a possibility of cutting interest rates twice in 2025.
With India’s inflation rate staying below the RBI’s medium-term target of 4%, hopes grew that the central bank might announce a rate cut in its upcoming April policy review.
Analysts also expect the RBI to introduce fresh liquidity measures, having already injected around Rs 3 lakh crore into the banking system through repo auctions and open market operations.
Market analysts recommend that short-term investors may take profits after the sharp upsurge, while long-term investors remain invested as more upside is possible if corporate results continue to be strong.
Though market conditions are volatile in nature, experts recommend basing investments on the fundamental analysis and not on short-term market movements.
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