Realty, metal, power and consumer durables indices were among the major underperformers, each of which declined by more than 50 per cent between January 8 and September 30 this year. Among the other sectoral indices of the Bombay Stock Exchange (BSE), the Capital Goods Index and the Bankex fell by 47 per cent each, while broader indices — the BSE Small-Cap Index (59 per cent) and the BSE Mid-Cap Index (52 per cent) — declined by over 50 per cent each during the period.
On January 8, the BSE Sensex had touched an all-time peak of 21,200 during the intraday trade.
Except for the fast-moving consumer goods (FMCG) and healthcare indices many of BSE sectoral indices hit their one-year low in September. Both these indices dropped by less than 15 per cent each from their January-8 levels, while oil and gas, auto and IT indices outperformed the Sensex, declining in the range of 27 per cent to 36 per cent during the period. During the same period, the Sensex dropped by over 38.4 per cent, while the S&P CNX Nifty fell by 37.6 per cent.
| FREE FALL | ||
| Indices | 30-Sep | Chg* |
| Realty | 3508.8 | -74.0 |
| Cons durable | 2929.2 | -55.4 |
| Metal | 8992.1 | -54.0 |
| Power | 2260.3 | -53.0 |
| Cap goods | 10581.1 | -47.7 |
| Bankex | 6478.9 | -46.4 |
| Sensex | 12860.4 | -38.4 |
| Nifty | 3921.2 | -37.6 |
| Oil & Gas | 9039.3 | -35.7 |
| Auto | 3675.0 | -34.3 |
| IT Sector | 3095.1 | -27.1 |
| Healthcare | 3672.2 | -14.5 |
| FMCG | 2160.8 | -13.8 |
The Indian markets have seen value erosion of 45 per cent or Rs 34.41 lakh crore to Rs 40.58 lakh crore on September 30 from a high of Rs 74.99 lakh crore on January 8. The realty sector was the biggest loser, which witnessed a 74 per cent decline in market capitalisation (m-cap) from Rs 13,483.90 crore on January 8 to Rs 3,508.77 crore on September 30.
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The US subprime crisis has created uncertainty among domestic real estate companies, with their sources of finance drying up. Lehman Brothers, which has filed for bankruptcy, and Merrill Lynch, which was acquired by Bank of America, have been among the large foreign investors in the domestic real estate market. Panic on Wall Street has triggered a sell-off among foreign investors, who have pulled out their investments from the domestic market, especially in realty stocks.
Investors in 58 real estate companies have lost Rs 308,146 crore, with the value of their investment plunging to Rs Rs 115,998 crore during the period under review. Most of the frontline real estate companies, such as DLF, Unitech, Indiabulls Real Estate, HDIL, Omaxe and Parsvnath Developers, reported over 70 per cent erosion in their market value.
The banking sector was the second-biggest loser in absolute terms, witnessed value erosion of Rs 306,958 crore. A rising inflation rate, a slowdown in lending and a fear of deterioration in the asset quality triggered the fall in banking stocks. The combined m-cap of 44 private and public sector banks declined by 45 per cent, with ICICI Bank and State Bank of India (SBI) witnessing value erosion of Rs 50,000 crore in the last nine months.
Power, telecom, IT, steel, trading and mining sectors have seen m-cap erosion of more than Rs 1,00,000 crore each, while the m-cap of non-ferrous metals, civil construction, non-banking finance companies, oil exploration, term-lending financial institutions and electrical equipment companies has declined in the range of Rs 50,000 crore to Rs 1,00,000 crore each.