The Reserve Bank of India's (RBI) policy action may have failed in containing the Sensex slide to a two-year low, but its intervention in rupee movement has helped Indian stock market retain its trillion-dollar tag, at least for now.
The market went into a tailspin today, as the central bank's decision to keep the interest rates unchanged did not help the sagging investor sentiments, and the barometer Sensex declined to its lowest level since November 3, 2009.
In the process, the value of Indian stock market, measured in terms of the collective value of all listed shares, fell to Rs 54,11,301.50 crore -- which is just over $1-trillion level at current currency rates.
In the US dollar terms, the Indian market would have lost its trillion-dollar valuation tag, if the rupee had managed to at least hold onto the record sub-54 level, it hit yesterday.
Rupee plunged to a record low of Rs 54.30 against the US dollar yesterday, but an RBI intervention reversed the fall and the Indian currency came back to near Rs 52-level.
At the rupee's record low level, Indian stock market's size would have been as low as $996.5 billion at the end of today's trade.
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However, as the rupee has returned to near 52-level and closed at Rs 52.70 against the US dollar today, the market valuation managed to hold onto the $one trillion mark -- although with a very thin margin at $1.026 trillion.
But, this position could be lost anytime, if there is any further fall in rupee valuation, or the stock market continues its losing streak.
There were no high expectations for any rate cut decision from the RBI's policy meeting today, but the prevailing high-rate regime has significantly hurt the corporate sentiments due to high borrowing costs.
The Indian market had first achieved a trillion-dollar size about four and half years ago on May 28, 2007, but moved out of this coveted league about a year later on July 1, 2008.
India again joined this elite club of markets with trillion-dollar valuation about a year later on June 3, 2009.
The Indian market was, in fact, seen inching towards the two-trillion dollar mark at least twice in the past -- first in early 2008 and then at the beginning of 2011 with a size as high as $1.9 trillion.
However, a sharp plunge in the market this year has led to its valuation falling by close to Rs 20 lakh crore (over $500 billion) and currently faces a high risk of losing its trillion-dollar tag.