Investing at “All Time High”
Also read: Why should women understand and manage personal finance? In 2000, when India was the 13th largest economy, the Sensex reached its all-time high of 5,934 points. Ten years later, when India became the 10th largest economy, the Sensex had notched 21,005. In 2020, when we were the sixth largest, the all-time high was 47,751.
As of March 2024, the Sensex had leaped to 74119. India has just surpassed the UK to become the fifth largest economy and is expected to become the third largest by 2030, surpassing Germany and Japan. However, this journey towards the third biggest economy may be very different from the earlier jump.
During this journey until 2030, India may witness noticeable growth in per capita income and hence consumption, which is the biggest component of our nominal GDP, followed by investment, government spending, and net exports. What is more important is when the economy moves beyond roti, kapda and makan (food, clothing and shelter) to ‘eat well, look well, and live well’, which is led by so-called discretionary spending, the nominal GDP may grow at an unprecedented rate and all this will eventually be reflected in the stock market level. Also read: Chain smokers may survive for 30 years, F&O traders die sooner: Vijay Kedia It's worth noting that the stock market doesn't always sync with nominal GDP growth in the short term.
At times, the stock market can outpace nominal GDP significantly. While nominal GDP tends to grow steadily over years or months, the stock market can occasionally surge, even by 12% in a single month. Rapid overnight growth isn't true growth but rather an instance of swelling.
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