For entrepreneurs and investors, market capitalisation, more than GDP data, is what matters
On Wednesday, Nifty closed at 21,654 (Sensex 72,038), both lifetime highs, no doubt engendering a feeling of wellness among investors. Markets have been on a tear in India following BJP's victory in the latest round of assembly elections, and the anticipation of a thumping victory in the 2024 general elections, coupled with a growing recognition of India's long-term potential.
The exuberance of the markets is well-timed when it comes to confidence, the all-important ingredient of economic growth.
In the last few years, the rapid growth of the Indian startup sector spread optimism among the wider business community. During 2020-22, when the economy was roiled by Covid and consequent lockdowns, the rise in the number of unicorns at a fast clip did much to spread cheer — and some jealousy — in the business community.
The startup sector is now clearly undergoing a period of retrenchment and consolidation, spurred by the downturn in so-called 'private markets'.
They have cut 28,000 jobs in the first three quarters of 2023. There are still 111 unicorns.
But their numbers are unlikely to rise at a gallop anytime soon. Fortunately, the public markets seem poised to take their place when it comes to spreading cheer.
It seems clear that Indian markets are experiencing the early stages of a bull run driven by positive structural changes.
GDP growth is likely to be in the 6.5-7.5% growth range for several years, and may surprise on the upside because capital investment is picking up.
GDP is likely to cross $4 trillion in the next fiscal and hit $5 trillion in 2026-27 as per IMF projections, transforming India into a significantly large economy. For entrepreneurs and investors, GDP statistics, though, are ultimately abstract
