M-cap of listed companies likely to touch $7 trillion by 2030: SEBI Whole-Time Member

2023-10-22 15:12:46

Market capitalisation of Indian listed stocks are likely to touch nearly $7 trillion by 2030, riding on the continued strong growth in the economy, Amarjeet Singh, Whole-time Member, SEBI, has said.

“ Today size of Indian economy is $ 3.73 trillion. Projection is our economy would grow to become a $ 7 trillion size by 2030. The Market Cap-to-GDP for both BSE and NSE as of end March 2023 was about 94 percent. Going by this recent trend of market capitalisation to GDP ratio, our market cap as a whole should increase to near about $ 7 trillion by 2030”, Singh said at a webinar on Corporate Governance, organised by Corporate Professionals.

Retail Investors, MFs

Singh, who was elevated to post of Whole-Time Member at SEBI in August, highlighted the “good runway in coming years in terms of growth potential”, noting that India was still far behind a developed market like the US in terms of number of retail investors as a percentage of population and even against the global average in case of Mutual Funds assets under management as a percentage of GDP.

In India’s case the number of retail investors as a percentage of population was just 5% as compared to 55% in the US. On the other hand, India’s MF assets under management as a percentage of GDP was 16 per cent, while global average is 75%, he said.

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This potential increase in penetration of securities sets the stage for greater corporate governance in the coming years, Singh added.

“Accomplishing corporate governance premium will be increasingly more critical for companies particularly those who aspire for higher valuation, lower cost of capital and those who wish to maintain trust and faith of investors in the Securities market”, Singh said.

Corporate Governance

Driven by these incentives, corporate governance would become more central without requiring much of more regulatory push, he said.

“Till such time corporate governance becomes more mainstream and greater part of companies’ DNA, as regulators we would continue to hear sort of a misplaced noise that the cost of compliance is high, laws are complex, where is the time for business etc,” Singh said.

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Hopefully going forward the decibel level around this noise will reduce and companies will see value in good corporate governance practices”, he said.

At the same time, Singh also said that many Indian companies are today already adopting good corporate governance practices rather than seeing them as burden or avoidable cost.

Regulators’ purview

Driven by their mandate of investor protection, regulators will have to keep a watch on developments, ensure transparency and greater fairness and minimise conflict of interests, Singh said. He noted that regulators have to carefully balance these objectives with ease of doing business and continue to step in with enforcement action in case of misconduct to set deterrence in market.

Both the Nifty50 and Sensex indices saw substantial growth over the years, with Nifty50 crossing the 10,000 mark in 2017. Nifty50 had on September 11 this year hit a record and crossed record high of 20,000 for the first time ever.

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Singh also highlighted hyper digitalisation and accelerated AI adoption as specific trends impacting the economy.

He also pointed out that globally some banks and financial institutions have embarked on “culture audits” and expressed hope this concept would be looked into by Indian companies as well.