M-cap of BSE-listed companies at record $3 trillion: Thank broader rally

 Share of top 100 firms on the exchange in m-cap falls to 67.3%; analysts advise caution

The country’s dash to a $3-trillion market cap is more a case of teamwork than a few members doing most of the heavy lifting. Sample this: The share of top 100 companies to India's total market cap (BSE-listed companies’ m-cap) is 67.3 per cent currently, less than what it has been when the nation hit previous milestones, such as $1 trillion, $1.5 trillion in 2007 or $2.5 trillion more recently in December 2020.

In 2007, when India’s m-cap topped the $1-trillion mark for the first time, the top 100 companies accounted for three-fourths of the total m-cap; at $1.5 trillion, the share was almost 80 per cent.

“This is a good sign as it means retail investors are creating wealth. Typically, retail investors dominate this space,” said Ambareesh Baliga, an independent market analyst.

The increased share of companies beyond the top 100 is on account of a stellar run in stocks in the small- and mid-cap universe this year. The BSE Smallcap index is up nearly 30 per cent and the BSE Midcap index is up 21 per cent year to date. In comparison, the Sensex is just up 6 per cent.

“I won't say the contribution stocks outside the top 100 is not healthy but the risk is proportionately rising. The June quarter will be bad because of the impact of the second wave of Covid and also valuations because small-caps have gone up,” said G Chokklaingam, founder, Economics.