MCAP contribution of big cedar
Analysis of data from the National Stock Exchange (NSE) Market Pulse publication shows that this shift occurred after 2020, when the US became increasingly centric, even as Indian markets lagged significantly.
India’s Herfindahl-Hirschman Index (HHI) score fell from 167.9 to 80.9 between 2020 and 2025. HHI is a measure of concentration, used in the context of market capitalization. Higher numbers indicate greater concentration. The HHI score for the US increases from 95 in 2020 to 164 in 2025.
India’s HHI has seen a consistent decline even during periods marked by major crises. It declined between 2005–2010, which was marked by the global financial crisis. It also declined during 2010-2015 and 2020-2025, with markets affected by the taper tantrum and the COVID-19 pandemic, respectively.
For the US stock market, concentration in large technology companies increased after 2020, resulting in Microsoft, Nvidia, Alphabet, Amazon, Apple, Meta, and Tesla being baptized as the “Magnificent Seven” in 2023 due to their superior performance. This is not true for all developed markets, for example Japan saw a decline in HHI from 83.9 to 75.9 over the same period.
Among emerging markets, China’s HHI index fell during this period from 301.2 in 1995 to 37.7 in 2025. The decline in China’s HHI was due to diversification away from the real estate sector, which accounted for 34 percent of the country’s market capitalization in 1995 and only 2 percent in 2025. Information technology (IT), meanwhile, grew from 2 percent in 1995 to 2 percent today. 18 percent in 2025, although the contribution of the industrial sector was 16 percent. India has seen diversification away from a commodities-led market with material dominance (25 per cent in 1995) being replaced by financial (25 per cent in 2025). Industrials, consumer discretionary and IT are also major contributors.
Joshi Jacob, professor at the Indian Institute of Management, Ahmedabad, said India’s top 10 companies largely represent banking and financial services, energy, IT services and fast moving consumer goods (FMCG). These capital-heavy firms have significant limitations to profitable scaling, which structurally limits the concentration of market capitalization in India. Furthermore, Jacob suggested that the large number of tech-native start-ups and midcaps listed on the market has reduced market cap concentration.
“In contrast to the increasing dispersion of market capitalization, the concentration of market share of Indian businesses in India has increased. Whether the declining trend of market capitalization concentration continues in the future may depend on new listings and the continued growth of recently listed tech-native firms,” he said.
Jacob attributed the surge in market cap concentration in the US to the emergence of two-sided platforms, technology firms and intangible-heavy firms, “which have strong moats and easily scale global businesses”. “The out-of-sync concentration of market cap compared to revenues is driven by their high global growth expectations and super-additive profit margins,” he said.
Indian stock markets have seen record amounts of money raised by new companies listing their shares on the stock exchange through initial public offerings (IPOs). There were 103 IPOs that raised ₹1.76 trillion in 2025, according to data from PrimeDatabase.com. The three largest IPOs were after the year 2020. The other two, apart from 2025, were 2021 (₹1.19 trillion) and 2024 (₹1.6 trillion).
