India will end 2011 as the worst-performing market among its peers. The benchmark Sensex has lost more than 35% in dollar terms and market capitalisation is barely over $1 trillion ? a steep plunge from last year?s $1.6 trillion when foreign institutional investors bought stocks worth nearly $30 billion.

The near-capitulation in the markets is hard to miss: Among BSE 500 stocks, 87% have given negative returns and nearly a third have lost more than half of their market value.

Amid the gloom, there are still stocks that have brought some cheer: The top five gainers in the BSE 500 were Amtek India, Gujarat Fluorocarbons, Alfa Laval, UTV and VST Industries. If one narrows the universe to the Nifty 50, those that walked away with the honours were FMCG majors Hindustan Unilever and ITC, and the cement trio of Ambuja Cement, ACC and Grasim. Not surprisingly, many of this year?s better-performing stocks belong to consumer space. Tata Coffee, Bata India, Gitanjali Gems and TTK Prestige have rewarded investors well.

As investments stagnate and order books thin at engineering majors like L&T, investors have chosen to stay away from the capital goods space altogether and play the consumer story instead. While India?s GDP growth slowed to 6.9% in the three months to September, gross fixed capital formation contracted for the first time since 2008-09 to -0.6%. The trend in consumption remained unchanged at 5.6% year-on-year but private consumption trends saw a deceleration at 5.9% year-on-year.

Among the worst BSE 500 performers were debt-laden GTL and GTL Infrastructure ? which have requested a lenders? bailout ? and KS Oil. In 2011, GTL lost more than 91%.

The biggest Nifty losers were Reliance Infrastructure, steelmaker SAIL, Reliance Power, Reliance Communications and Hindalco. SAIL?s profit fell 55% in the three months to September due to the mark-to-market impact of short-term currency loans, while expensive coal and bauxite hurt Hindalco?s aluminium business with the standalone Ebitda falling 7% year-on-year and 23% sequentially.

It?s not surprising that share prices have fallen so sharply because corporate India turned in a dismal performance in the September quarter.

For a sample of 2,437 companies (excluding banks, NBFCs and oil marketing companies) net profits crashed about 50% year-on-year. It was the first quarter in two years to see a fall in the profits of the Nifty 50 companies. Adjusted net profits for the Sensex set of companies rose 10.8% year-on-year but ex-energy, they were flat. While investors were betting on banking stocks at the start of year, the slowing economy and concerns of rising non-performing assets prompted investors to pare their positions. The other space that fared poorly during 2011 is the real estate sector where companies are believed to be overleveraged at a time when sales are slow.

In a weak market, smaller stocks were battered; of the 319 stocks of the BSE 500 that underperformed the Sensex, 58% were either small or mid-cap stocks. During the year, the BSE Midcap index has lost 33% while its small-cap counterpart has given up 41%.