Investors Rs 5 lakh cr poorer

Written by Pradip Kumar Dey | Mumbai | Updated: Jan 15 2011, 06:06am hrs
If investors were hoping to make money in the new year, their hopes have been belied so far. Over the last 10 trading sessions, investors have lost Rs 5.5 lakh crore in wealth as foreign investors pull out money.

Indias market capitalisation has come off to Rs 68.53 lakh crore, giving up 7.4%, from Rs 74 lakh crore at the start of the year. Indias largest firm Reliance Industries has seen the maximum wealth destruction in absolute terms at over Rs 20,000 crore.

On Friday, the benchmark BSE Sensex closed at 18,860, its lowest level since September 9, 2010 while the broader Nifty ended the session below the 5,700 marke. The Sensex index is down more than 8% since January 3, 2011. Interestingly, the maximum destruction has taken place in the marquee A group shares. Markets are facing headwinds both locally and globally. Locally scams, high inflation and interest rates have shaken investor confidence. Internationally, problems relating to European sovereign defaults and continuous rate tightening by China to address inflation have hurt the sentiment, said Jagannadham Thunuguntla, Strategist & Head of Research, SMC Global Securities.

Sectorally, FMCG, Pharma, media have seen marginal decline, while sectors like fertilizers, banks, infrastructure and sugar have seen much deeper erosion in market cap.

Since the start of this year, the market cap of the retailing companies saw a maximum 13% decline, followed by fertilisers (-12.6%), banks (-11.8%), construction (-11.6%) and tyres (-11.1%).

Among the industrial houses, significant wealth has been eroded in the case of Tatas, Ambanis, Bajaj, Subhash Chandra and Om Prakash Jindal.

The aggregate market cap of the BSEs A group, which comprises of over 81% of the BSE market cap, decreased from Rs 60.13 lakh crore on January 3, 2011 to Rs 55.53 lakh crore on January 14, 2011.