India's Stock Market Less Concentrated Than US, Analysis Reveals
Mcap contribution of large firms lower in India than US, shows data
Business Standard
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Recent data indicates that the Indian stock market has become less concentrated among large firms compared to the US, with India's Herfindahl-Hirschman Index (HHI) score dropping significantly. This shift reflects a diversification in India's market structure, particularly in the wake of the COVID-19 pandemic.
- 01India's HHI score fell from 167.9 to 80.9 between 2020 and 2025, indicating reduced market concentration.
- 02In contrast, the HHI for the US increased from 95 to 164 during the same period, highlighting a trend toward concentration in large tech firms.
- 03India's market has diversified away from commodities, with significant contributions from financials, IT, and consumer sectors.
- 04The number of tech-native startups has contributed to lower market cap concentration in India.
- 05Record IPO activity in India, with 103 IPOs raising βΉ1.76 trillion in 2025, reflects growing investor interest.
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The analysis of data from the National Stock Exchange (NSE) reveals that the Indian stock market is now less concentrated than that of the United States. Between 2020 and 2025, India's Herfindahl-Hirschman Index (HHI) score, which measures market concentration, dropped from 167.9 to 80.9, while the US score rose from 95 to 164. This shift is attributed to a diversification in India's market, particularly following the COVID-19 pandemic, as sectors like financial services and information technology gained prominence. Notably, India's market has seen a significant reduction in the dominance of commodities, with financials now representing 25% of market capitalisation in 2025. The rise of tech-native startups and midcap firms has further diluted market concentration. In contrast, the US market has seen increased concentration in large technology firms, often referred to as the βMagnificent Seven.β Additionally, India's stock market has experienced a surge in initial public offerings (IPOs), with 103 IPOs raising βΉ1.76 trillion (approximately $21 billion USD) in 2025, marking a record year for new listings.
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The diversification of India's stock market could lead to more investment opportunities for both domestic and international investors, potentially stabilizing the market during economic fluctuations.
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