Are We Going to Witness the Biggest ever run in Indian Stock Market?

What if below pattern repeats History Again in the stock market?

Prime Minister Narendra Modi has stated several times his intention to take India to a $5 trillion economy. He first announced this ambitious goal in his 2019 Independence Day speech, and has reiterated it on various occasions since then. But will this impact our stock market returns?

What happens to a country's Stock market when its economy reaches from $2T to $5T?

When similar pattern was made with 3 countries in the past USA, China and Japan, where USA stock market grew at 17% CAGR, China's market grew 4X meanwhile, the Japan's stock market grew by 19X.

As you can see in the above chart of Nifty Smallcap100/ USDINR, which depict the returns of Nifty Smallcap Index in USD dollar terms. Smallcap has given zero returns in dollar terms in last 16 years from 2007 to 2023. But now for the first time it has started giving returns in dollar terms which makes it more attractive for the FIIs to invest.

A cup and handle pattern is form when there is a price rise follow by a fall. The price rallies back to the point where the fall started, which creates a “U” or cup shape. This is a classic pattern followed by many great investors and traders. To measure its target we project the hight of the cup to its breakout point.

Why Indian Market is poised to Grow?

1. Slowdown in one of world's largest manufacturing hub i.e. China

With China's growth slowing, India has an opportunity to increase its market share in global exports. This is particularly true for sectors such as textiles, pharmaceuticals, and chemicals.

2. Enhanced spending on Infrastructure

The government is investing heavily in infrastructure development and railway which is essential for supporting economic growth.

3. Promoting domestic manufacturing (Atmanirbhar bharat)

The government has launched several initiatives to boost domestic manufacturing, such as the "Make in India" program.

4. Government reforms at its peak

The Indian government has implemented several reforms in recent years to improve the ease of doing business and attract foreign investment. These reforms include relaxation of FDI regulations, tax cuts, and infrastructure development.

5. Strong Inflows from Domestic investors

The current highest ever SIP inflow in India occurred in October 2023, with an impressive figure of ₹16,928 crore. This surpassed the previous record of ₹16,402 crore set in September 2023.

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