NEW DELHI: The darkest fears of Dalal Street have just come true. This is borne out by the headline stock indices coming off a heady 9 per cent from their all-time high of January 29 this year. With one stroke, over Rs 12 lakh crore of investor wealth are shaved off.
Market capitalisation of BSE-listed firms stood at Rs 142.46 lakh crore as of March 7, from Rs 155.13 lakh crore as of January 29. A host of factors, including the nearly Rs 12,000 crore PNB fiasco, sustained selling by foreign institutional investors, global cues and valuation issues, proved to be the drag.
The NSE Nifty index plunged 1,017 points to 10,154.20 on March 7 against its all-time peak of 11,171.55 on January 29. Likewise, the 30-share BSE Sensex pulled back over 3,410 points to 33,033.09, from the earlier 36,443.98, during the same period.
On the current market pain, Nitasha Shankar, Senior Vice President and Head of Research, YES Securities, said: “Post the Union Budget, the Indian stock markets have been on a roller-coaster ride. In recent times, they have been hovering in the negative territory. This is largely related to the PSU banking stocks that have been ruffled with news flows and developments related to one of the largest PSU banks. And this has had a negative impact on the headline indices, considering that banking stocks in general and PSU banking scrips form a substantial chunk of the same.”
Even small and midcap stocks were not left unscathed — a common trait with this category whenever there is any adverse news in the market. The BSE Midcap and Smallcap indices have tanked over 12 per cent and 13 per cent, respectively, from their respective life highs they hit in January 2018.
A sectoral analysis shows that banking, PSUs, capital goods and real estate firms burnt their fingers badly. BSE Bankex, PSU, Capital Goods and Realty crashed up to 13 per cent during January 29 and March 7.
Other sectoral indices on the BSE had a fall of 4-9 per cent during the same period. Nifty PSU Bank and Nifty Private Bank slipped over 21 per cent and 10 per cent, respectively.
Despite the recent downward pressure, experts believe that consumer-facing sectors will deliver robust returns to investors in years to come. Vidya Bala, Head of Mutual Fund Research at FundsIndia, said, “Consumption, especially rural consumption, will undergo a transition and the impact of it will be seen across consumer (FMCG and consumer discretionary) and consumer-linked sectors such as auto, retailing, retail credit, telecom and housing. This space will likely dominate the Indian equity market for the next 3-5 years.”
Shankar also prescribes infrastructure and select housing segments for investment play. “For India, the broader situation is not bleak at all as the broader fundamentals are unbroken. The fact is that the problem of housing shortage does remain. The need for quality infrastructure in the country is strong. The story of higher consumption and discretionary spends is very much intact. The government’s push towards improving the livelihood of the rural and agri space is real,” added Shankar.
The correction appears so severe when you figure out that 84 per cent of stocks on the BSE 500 index have eroded investors’ wealth during the period in question. As many as 37 stocks in the index sank over 20 per cent, with Vakrangee down 64 per cent at Rs 178.15 on March 7, from Rs 487.10 on January 29 when the market hit its all-time peak.
Banking majors, including Punjab National Bank (down 45 per cent), PC Jeweller (42 per cent), Bank of India (38 per cent), Union Bank (30 per cent) and Allahabad Bank (33 per cent), were high on the loss list.
Siti Networks, Shilpa Medicare, Aban Offshore, Titagarh Wagons, Birla Corp and Bank of Maharashtra slipped between 25-30 per cent during the same period.
Those who hit a home run included Venky’s India, IDBI Bank, Firstsource Solutions, FDC, Ipca Labs, KEC International, Can Fin Homes and Bajaj Electricals, with a rally of over 75 per cent during the same period.