Stellar returns lure global investors to India's $5 trillion stock market
Surpassing a $5 trillion market capitalisation and with foreign portfolio investor (FPI) assets under custody exceeding $900 billion, India's economic allure is undeniable, says the head of the oldest stock exchange in Asia.
Sundararaman Ramamurthy, managing director and CEO of BSE — the sixth-largest stock exchange in the world — attributes this to India's status as the fastest-growing major economy, boasting a GDP growth rate exceeding 7.0 per cent over the past 15 years.
'Coupled with a well-regulated, digitally advanced market, low entry barriers, and superior returns — evidenced by the BSE Sensex's 16 per cent CAGR over 30 years compared to 11 per cent for gold and 8.5 per cent for the S&P 500 — India offers unmatched opportunities,' Ramamurthy told Khaleej Times in an interview. The BSE chief was in Dubai last week as a keynote speaker at the Indian Business and Professionals Forum.
'BSE is strategically positioned to attract both domestic and global investors. Our approach is multifaceted, focusing on enhancing ease of trading, streamlining entry norms, and leveraging unique opportunities like GIFT City to make BSE the preferred platform for international portfolio investors,' said Ramamurthy.
He said the doubling of India's share in global indices and world market capitalisation over the past three years further underscores its rising prominence. 'BSE is strategically enhancing its appeal to both domestic and international investors.'
To counter the trend of Indian investors trading on foreign exchanges, BSE has introduced faster trade settlements with T+1 and T+0 cycles, enabling quicker capital turnover. Initiatives like the Common Application Form (CAF), digital signatures, and SWIFT-based certifications have streamlined FPI registration, while the Common Application Tracker Portal and FPI Outreach Cell provide real-time support. 'Relaxed KYC norms for funds under the same Investment Manager further reduce onboarding time. Despite delays in implementing the common contract note — now targeted for July 2025 — BSE is collaborating with regulators and technology vendors to ensure seamless adoption, enhancing transparency and reducing operational friction,' Ramamurthy said. 'These efforts position BSE as a gateway to India's dynamic markets, with ongoing simplification to maintain its edge.'
The derivatives segment has seen a remarkable turnaround under Ramamurthy's leadership, with BSE's market share soaring from near zero to nearly 20 per cent in a year. This success stems from introducing Sensex derivatives, tailored to meet the needs of traders, brokers, and institutional investors. By April 2025, BSE recorded an average daily notional turnover of $15.6 billion and a premium turnover of $1.86 billion, peaking at $6.36 billion in a single day, with engagement from 515 active members, 7.5 million active clients, and 280 FPIs.
Sustaining this momentum involves deepening engagement with over 600 brokers and 500 FPIs, introducing monthly expiries, and expanding colocation facilities. BSE's focus on 'Customer Delight' emphasises exceeding expectations and innovating continuously, ensuring it remains competitive against the National Stock Exchange (NSE) by benchmarking against its own performance.
BSE's $6 million investment in infrastructure over the past 15 months has bolstered its global stature. Technological advancements include expanding colocation services with high-performance servers and 15 KVA-powered racks, increasing from 100 to 350 racks with a target of 500. The BSE's clearing arm, ICCL, has enhanced its capacity to handle trades from major players, significantly boosting order processing capabilities. The trading system now processes 18 times more order messages daily, while the StAR MF platform handles over 60 million mutual fund orders annually. Artificial Intelligence (AI) and machine learning are transforming operations, with pilot programs using large language models to review Draft Red Herring Prospectuses in 25 to 40 minutes, a task that once took a week. AI-driven mechanisms also track digital media for news on listed companies, enhancing regulatory oversight and mitigating risks of market manipulation.
BSE's customer-centric approach ensures inclusivity across retail investors, institutional players, and brokers. For retail investors, BSE promotes accessibility through platforms like ManekiMano, a viral video series with over 1.2 billion views, simplifying financial concepts and educating against fraud. The Investor Protection Fund conducted 14,000 events in FY25, boosting financial literacy.
For institutional players, BSE offers efficient infrastructure, including colocation services and a combined order book, while engaging through industry forums to align with strategic goals. Brokers receive support for regulatory submissions and product approvals, streamlining operations, Ramamurthy added.
'With India's working-age population — 70 per cent under 30 or women — projected to be the largest globally by 2030, BSE is leveraging AI and mobile apps to enhance financial inclusion in Tier-2, Tier-3, and Tier-4 cities. Real-time surveillance, algorithmic monitoring, and cyber threat detection further build trust, positioning BSE as a trusted platform for investors to capitalise on India's high-growth economy, diverse sectors, and superior returns,' the BSE chief said.
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