Goldman Sachs on stock markets, start-ups and IPO

Investors have been pouring money into India’s stock market, and it could grow to more than $5 trillion to become the fifth largest in the world within three years, according to Goldman Sachs.

Indian start-ups have raised $10 billion through IPOs so far this year — more money than was raised in the last three years, the investment bank said in a report dated Sept. 19.

And the pipeline for future public listings is expected to remain robust over the next two years, Goldman analysts said. Based on Goldman’s analysis, as many as 150 private firms could potentially list on the stock market over the next 36 months.

“We estimate nearly US$400bn of market cap could be added from new IPOs over the next 2-3 years,” Goldman analysts wrote.

They explained that could drive India’s aggregate stock market value to increase from $3.5 trillion currently to over $5 trillion by 2024. That’s likely to make the South Asian country the fifth largest in the world by market capitalization, surpassing the U.K. and the Middle East.

Many of India’s largest technology start-ups have announced plans to go public, which some investors say will usher the beginning of a new era for the entire ecosystem.

Food delivery firm Zomato became the first of a slate of prominent names to be publicly listed. Others in the pipeline include payments giant Paytm, ride-hailing start-up Ola and e-commerce firm Flipkart.

“What we’re really flagging here is that as exciting as China was over the last decade, when you had this new China story — which is very, very profitable and successful for investors – we could see some sort of an analog of that beginning to take place in India,” Timothy Moe, co-head of Asia macro research at Goldman told CNBC’s “Street Signs Asia” on Monday. Moe was one of the report’s co-authors.