Of creation and erosion

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: Investors have witnessed an addition of Rs 20,20,796 crore (54.3%) in their wealth in the last 253 trading sessions on the stock exchange, Mumbai (BSE). The total BSE M-Cap has increased to Rs 57,43,414 crore on April 17, 2008 from Rs 37,22,617 crore on April 17, 2007. Also, on the National Stock Exchange (NSE), the M-Cap increased by 18,71,200 crore (53%) to Rs 54,01,324 crore on April 17, 2008 from the level of Rs 35,30,124 crore on April 17, 2007.

The Sensex increased by 2874.16 points (21.12%) to 16,481.20 on April 17, 2008 from 13,607.04 on April 17, 2007. The Nifty, on the other hand, increased by 973.45 points (24.43 %) to 4958.40 on April 17, 2008 from its previous level of 3984.95 on April 17,2007.

DR Dogra, ED, CARE said, “The rise in the Sensex was due to higher growth rates, huge FII inflows, capex plans by industry players; etc. However, with negative cues from the US due to subprime losses, the Sensex lost more than 5,500 points from peak and closed at 16,481.2 points as on April 17, 2008.”

A sectoral analysis shows that while the top one sector, namely oil and gas in terms of market cap has increased by 56.44% during the study period, the contribution of sectors like trading, steel, shipping, food processing, electric equipment, construction, and aluminium have been far higher in boosting overall market cap values. In contrast, IT, automobiles, electronics, entertainment were laggards, and saw an erosion in market cap compared to April 17, 2007.

Among the major industrial houses, significant increase in M-Cap was seen in the case of Essar (357.7%) followed by Jindal Om Prakash (153.5%), Anil Ambani (126.8%), Mukesh Ambani (88%), and Gaur Jaiprakash (85.7%). The M-Cap of three Mukesh Ambani group companies increased from Rs 2,49,465 crore on April 17, 2007 to Rs 4,69,103 crore on April 17, 2008.

An opposite trend was seen in the case of Bajaj (-56.8%), Mahindra (-27.1%), Videocon (-23.8%), Kalyani (-13.1%), and Shiv Nadar (-6.4%). The M-Cap of nine Bajaj group companies decreased from Rs 31,689 crore on April 17,2007 to Rs 13,702 crore on April 17, 2008.