Watch out Hong Kong – India's $4 trillion stock market is fast catching up

• India's stock market hit a $4 trillion valuation for the first time on Tuesday, per Bloomberg.
• It's narrowing the gap with Hong Kong, the world's fourth-largest stock market.

The value of companies listed on India's stock exchanges hit $4 trillion for the first time on Tuesday – narrowing the gap with Hong Kong, Bloomberg reported.

Hong Kong is the world's fourth-largest stock market, but is now worth less than $4.7 trillion following an 18% slide in the Hang Seng Index this year.

In contrast India's two main indexes, the Sensex and the Nifty, are up 13.3% and 14.6% this year.

The Indian market was worth less than $1.5 trillion in pandemic-affected 2020, according to Bloomberg, but has since made significant gains.

Investors have been reassured by wins in three state elections this weekend for India's ruling party, headed by prime minister Narendra Modi.

"The market is taking comfort from the victory of BJP due to hopes of policy continuity in 2024, focusing on growth rather than fiscal populism," Sanjeev Hota of stock broker Sharekhan told Reuters.

Despite global economic headwinds, India — the world's fastest-growing economy — is projected by the IMF to expand by 6.3% this year.

Investors, from Apple to Goldman Sachs, have been upbeat about the country as a destination for investment.

The three biggest stock markets are the US, worth just over $48 trillion, followed by China at about $9.6 billion and Japan on almost $6 trillion, per Bloomberg figures.