Top 10 firms account for one-third of the losses; Sensex down nearly 15%, 8 out of 13 sectors on BSE at 52-week low
With the Bombay Stock Exchange Sensitive Index, or Sensex, on a 15-month low, market investors have together lost as much as Rs 9 lakh crore in the past four weeks.
Concerns in the US and Europe have hurt Indian markets in recent months. Total investor wealth, measured in terms of cumulative market value of all listed companies, has plummeted in the said period by Rs 911,740 crore, being at Rs 5,929,249 crore at the end of on Friday’s trade.
Being invested in blue chips was no relief. The top 10 companies lost a third or Rs 290,000 crore of their market value. These include Reliance Industries, Tata Consultancy Services, Infosys, State Bank of India and ICICI Bank.
On Friday, the BSE Sensex tumbled 328 points or two per cent, to settle at 16,142, its lowest closing level since May 2010. From a recent high of 18,871 on July 25, the Sensex has tanked 2,729 points or 14.5 per cent in 18 trading sessions.
There has been massive net outflow by foreign institutional investors (FIIs), amid concerns that higher interest rates and global economic slowdown would restrict corporate profit growth. FIIs sold shares worth Rs 9,547 crore in the past four weeks, show provisional data from the stock exchanges.
FIIs have been net sellers of stocks worth Rs 13,996 crore so far this year. Domestic institutional investors have, on the other hand, bought shares worth a net Rs 21,032 crore this year so far. “On the macro side, it is extremely negative because of the global uncertainty, as there are concerns of US seeping into recession and debt crisis in Europe,” said Alex Mathew, head of research, Geojit BNP Paribas Financial Services. “The banking sector in India may also see some pain, because India is highly correlated to the US and Europe. The US situation is very volatile; the crisis may escalate and it may be more prolonged than the last recession.”
As many as 687 of the 3,286 actively traded stocks have seen one-fourth market value erosion since July 25. The price of 971 stocks declined by 15-25 per cent each. And, 654 stocks dropped to two-year lows, of which 12 are from the 30-share Sensex. Reliance Communications, Reliance Power, Mahanagar Telephone Nigam and DB Realty are among 146 companies at all-time low levels on the BSE.
Eight of 13 sectors classified by the BSE are trading at 52-week lows. Realty, metals and information technology were worst hit, having declined more than 20 per cent each. The bankex, capital goods and power indices dropped 15-20 per cent each during the period.
Compared to the 2008 fall, which lasted 10 months (the markets have again been on a downward trajectory for the past 10 months), the fall seems smaller this time. However, in value terms, the pain has been significant. Between January and October 2008, the Sensex fell 64 per cent and investors lost wealth worth Rs 2,139,602 crore. The total market cap fell from Rs 4,818,097 crore on January 8, 2008, to Rs 2,678,495 crore on October 27, 2008. This time, the Sensex has dropped 24 per cent, but the market cap has plunged from Rs 7,808,067 crore on November 5, 2010, to Rs 5,929,249 crore on Friday, an erosion of Rs 1,878,818 crore.
