The stock market in India has surpassed that of Hong Kong, becoming the seventh in the world

The market value of the Indian Stock Exchange has surpassed that of its rival in Hong Kong, becoming the seventh largest in the world, as optimism about the country's economic prospects is growing, according to CNBC.

At the end of November, the total market capitalization of India's National Stock Exchange was $3.989 billion, compared to $3.984 billion for the Hong Kong Stock Exchange, according to data from the World Federation of Stock Exchanges.

India's Nifty 50 index hit a new record high this week. In 2023, the Nifty 50 has climbed 16% and, if the upward trend continues, will end its eighth consecutive year of gains. In contrast, the benchmark Hang Seng index of the Hong Kong Stock Exchange has fallen by 17% this year.

India was a remarkable market this year in the Asia-Pacific region, notes CNBC. The increase in liquidity, more domestic participation and the improvement of the dynamics in the global macro environment, against the background of the decrease in the yields of American government securities, stimulated all the stock markets of the country.

The world's most populous country is also heading for general elections next year, and analysts are predicting another victory for the ruling nationalist Bharatiya Janata Party (BJP).

"For the general elections, opinion polls and recent state elections indicate that the incumbent BJP-led government could secure a decisive victory, which could trigger a bull trend in the market in the first three to four months of of the year, based on the expectations related to the continuity of the policies", are the opinion of HSBC bank strategists, quoted by CNBC.

According to HSBC, banking, healthcare and energy are the best-positioned sectors for next year, and areas such as automotive, retail, real estate and telecommunications are also relatively well-positioned for 2024, while consumer goods, utilities and chemicals are unfavorable.

• Discounts for Hong Kong

Hong Kong's Hang Seng Index is on course for a fourth straight year of declines and also posted the worst performance among major Asia-Pacific stock markets, according to CNBC.

Last week, Moody's cut its outlook for Hong Kong from "stable" to "negative", citing the city's financial, political, institutional and economic ties to mainland China. This downgrade came shortly after Moody's cut its outlook for China's government credit ratings to "negative" from "stable."

In early November, the Hong Kong government said it expected the city's economy to grow by 3.2% in 2023, reducing its 4-5% GDP growth estimate released in August.

The city's government has warned that rising geopolitical tensions and tight financial conditions continue to affect investment, goods exports and consumer confidence.

"Hong Kong's economy is poised for a slow landing in 2024, as annual real GDP growth moderates to around 2%, compared to 3.5% in 2023," say DBS economists, emphasizing: " At the center of this recovery is the revival of continental tourism, which would strengthen the retail and catering sectors".

A recent analysis by Bloomberg showed that the historic drop of $4.6 trillion in the capitalization of the Hong Kong Stock Exchange is being felt in the city's financial industry, with 30 local brokerages closing this year.

"This wave of closings and layoffs affecting brokerage houses is the most severe we've ever seen," said Edmond Hui, executive director of Hong Kong brokerage Bright Smart Securities, citing Bloomberg. The key is to improve market liquidity. Now everyone has problems. I just don't see a light at the end of the tunnel."

Average daily turnover on the Hong Kong Stock Exchange is down 14% compared to the five-year average, and the initial public offering (IPO) market is in its worst year since 2001.