New Delhi, Dec 11 Wealth creation in the Indian equity market during 2020–2025 (five-year period) was the highest in the last 30 years, with the top 100 companies adding Rs 148 trillion, driven by the sharp rebound from the Covid-19 pandemic lows, a report showed on Thursday.
Meanwhile, Financials remain the largest Wealth Creating sector, followed by Industrials, Capital Markets, Technology and Utilities. PSUs extend their comeback, especially in defence, energy and utilities. BSE and Hindustan Aeronautics were among the biggest, fastest and 'Most Consistent Wealth Creators' during the period, Motilal Oswal Financial Services Ltd (MOFSL) said in its report. HAL was also the best all-around wealth creator.
According to the report, the world is getting wealthier and so is India, with global financial assets compounding steadily and India’s market cap compounding at 17 per cent over the last 20 years.
India is now the fourth-largest equity market globally. “India is entering its most powerful compounding era. As the economy moves from $4 trillion toward $16 trillion, the combination of rising financialisation, expanding equity ownership and stronger corporate profitability is creating a multi-trillion-dollar opportunity for investors," said Raamdeo Agrawal, Chairman, Motilal Oswal Financial Services Ltd.
"Long-term wealth will be created by high-quality businesses that can compound for decades. The key is to select your compounders carefully and avoid the temptation to time the market," he added.
There is no absolute upper limit to financial wealth; despite periodic disruptions, global and Indian equity markets continue to expand structural wealth over long cycles, the report noted.
India’s GDP quadrupled from $1 trillion to $4 trillion in the last 17 years and the study projects another quadrupling in the next 17 years, driving a multi-trillion dollar (MTD) opportunity across sectors.
In this MTD era, Financials (including Capital Market businesses) and Consumer Discretionary are expected to witness explosive expansion as they hit scale and penetration tipping points.
"The MTD era will see many compounding stocks, supported by rising incomes, financialization, formalisation, and strong corporate profit cycles. Large caps are likely to perform better in the medium term," the report highlighted.
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