India's Equity Market Poised to Double to $10 Trillion in Four Years
India’s equity market could nearly double in size to $10 trillion over the next four to five years, driven by strong economic growth, disciplined regulation, and a deepening culture of financial participation, according to Raamdeo Agrawal, Chairman and Co-Founder of Motilal Oswal Financial Services.
Speaking to CNBC-TV18 on the sidelines of the release of Motilal Oswal’s 30th Wealth Creation Study, Agrawal said India is already well ahead of the curve in terms of financialisation, even though per capita income remains under $3,000.
“We have a $5 trillion market today, and in the next four to five years, we will have a $10 trillion market given the disciplined way in which the system is being managed,” Agrawal said. “Our regulators have been disciplined, and the financial system has been managed well.”
Addressing concerns around whether India may be over-financialising at a relatively low level of per capita income, Agrawal argued that markets are inherently self-correcting and anchored to earnings growth.
“Unless there are corporate earnings, nothing will be supported,” he said. “Valuations may move from 22 to 24- or 25-times earnings, but then supply will come. When markets get overheated, there is a lot of supply of paper. When markets get depressed, supply evaporates.”
Agrawal also highlighted the structural shift underway in how wealth is created and measured, arguing that traditional valuation anchors like market capitalisation-to-GDP ratios need to be reinterpreted. He noted that the so-called Buffett Ratio — market cap as a proportion of GDP — was long believed to have a ceiling of around one. India’s ratio has risen from about 0.5 in 2005 to around 1.3 in 2025, reflecting deeper markets and rising participation.
“In the US, this ratio is already at 2.3 times, with about $71 trillion of market cap and $30 trillion of GDP,” Agrawal said. “Buffett himself had suggested the limit could be as high as five times.”
According to him, rising market capitalisation creates a virtuous cycle. Wealth generated in financial markets feeds into higher consumption, investment, and savings, which in turn supports economic growth and corporate profitability. “This is the new invisible hand,” he said. “Markets and wealth creation are allocating capital, deciding where savings go, and redirecting them through the stock market into the real economy.”
Agrawal emphasized that the transition from physical wealth to paper wealth, and now to digital wealth, is a significant factor in this growth. “From physical wealth, the world transitioned to paper wealth, and now paper is becoming digital wealth. The concept of securitisation led to this entire creation of wealth,” he explained.
He added that while India’s per capita income is under $3,000, the country’s financialisation is a positive trend. “It’s a fantastic thing. We have a $5 trillion market today, and in the next four to five years, we will have a $10 trillion market, given the disciplined way in which the system is being managed.”
Agrawal also discussed the India@100 portfolio for 2047, which projects India becoming a $16 trillion economy by around 2040–42. “The journey from four to sixteen will not be without potholes, but it will happen,” he said. “When per capita GDP crosses $3,000 to $3,500, consumption explodes. India is under-penetrated in almost everything.”
Financials, including capital markets, and consumer durables are identified as big areas for growth. “Cars are one big item. Houses are even bigger. The ticket size of housing is much larger, but real estate is deeply cyclical, with many suppliers. Cars have fewer suppliers and are more secular,” Agrawal concluded.
