The stock market is one of the essential parts of an economy. It is because it reflects a country’s GDP and its growth rate idea. If we talk about the Indian economy, it is the world’s fastest-growing economy and is expected to achieve $5 trillion by 2025. Also, the Indian population includes the most percentage of youths of working age.
Hence, India will beat many countries’ economies in a few years and achieve a significant milestone. Currently, the USA and Japan both have the oldest population size. Hence, there are fewer chances of huge economic growth in these countries. So, before we start understanding the future of stock market in India, let’s also understand how a stock market works. Because it will give better clarity and help us understand the actual growth rate in the Indian share market.
How Does Stock Market Work?
It’s a demand and supply game that controls and functions the stock market. Here you can see the set of buyers, investors, or traders willing to buy a specific company’s stock at a specific price. Also, some sellers are ready to sell the same stocks to buyers at a determined price. However, the stock price is determined based on the performance, prediction, and current trends. In the stock market, investors make money from the generated revenue, which comes from selling stocks.
Also, government bodies like SEBI and the government affect the stock market several times to keep the environment healthy and friendly for all parties. Nowadays, the agricultural sector is also seeing positive growth; it contributes 14% of the total GDP of India and has also employed almost 44% of the people of the nation. Hence, while counting the growth of the Indian stock market, the agricultural sector can not be ignored.
Current Trend of Stock Market in India
At present, many things are happening in India and outside India. All these factors will affect the current scenario and future of the Indian stock market. It is because the Russia and Ukraine war has generated a shortage of many utility things in the world and Indian market. Inflation is also getting high at a high pace; currently, you might have noticed the increase in petrol prices. Not only this, but the other stuff is also getting costlier.
The Reserve Bank of India has also increased the rates, so the loan becomes costly, and people spend less money on taking debt. Indian investors can also see the major impact of DII and FII. It is because FII is withdrawing its money back, whereas DII is buying these stocks back. Indian companies have also performed very well in taking advantage of many market opportunities. Hence, in the future, these companies will see some positive growth and contribute to the growing Indian economy.
Future of Stock Market in India
We have discussed how the stock market works and the current scenario in the stock market in India. Hence, now you are ready to understand the future of the stock market in India. Many experts reported the Indian economy is recovering, but still, it’s not growing at the expected percentage. It was expected that the latest budget would boost the economy, but it did not happen in the same proportion.
Also, most of the Indian economy is based on good rain, as the agricultural sector contributes 14% to the Indian economy. And most farming activities and crops rely on proper rain. If rainfall happens in a good percentage, it increases the supply of fresh crops and boosts the economy. However, the Indian economy is currently valued at nearly $2.72 trillion, and if it needs to achieve $5 trillion milestones, it needs at least 10% yearly growth. And it is where the stock market works and grows the Indian economy. In the past few years, people have become much more aware of the stock market, and available investing platforms have made investment and trading easy.
FDs and money market investments also do not offer much interest rates. Hence, it’s also the reason people are considering investing in IPOs and mutual funds. It was also noticed that IPOs are one of the favorite investment options among Indian investors. Based on the latest report, almost 2.5 crore Demat accounts are active at present. And it was only 1.5 crore in 2015; hence, you can see Indian people are taking an interest in the stock market and have also started investing.
But still, we have fewer people who invest in the stock market compared to the USA and other developed nations. The government has also developed several reforms and policies to support startups and MSMEs. So they can generate employment opportunities and contribute to nation-building. Startups and small businesses are also becoming a preferred option among investors. Even large companies like Tata and Unicorns like Unacademy acquire new companies.
Many foreign companies are also coming to India and setting up their plants. And they are generating employment opportunities for youth and the Indian workforce. Development and innovation in science and the latest technology have also invested a fruitful choice among youth and working professionals. Most people have started investing in Mutual funds and IPOs. Also, developed countries’ stock markets offer a low rate of return. Hence, those investors are shifting to developing nations like India and putting their money on listed and growing companies.
In short, the Indian economy will touch the $5 trillion milestones in a few years. And the Indian stock market will also have a decent place in the top stock markets. Also, now youth have started their money in various investment sources. We have already planted strategic seeds to grow the Indian stock market. Whether it’s government or leading companies, all are putting their efforts into investing simple, transparent, and small investor-friendly. So, more people can participate in such activities and contribute their precious to grow this market and maximize their portfolio.
We hope now you have a clear idea about India’s stock market growth. If you keep wishing to read such fresh and interesting reads, stay tuned to our blog. Here we keep sharing the latest and innovative posts on share market and finance terms.