Of creation and erosion

Written by Pradip Kumar Dey | Updated: May 24 2008, 07:07am hrs
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.

The M-Cap of A group (188 companies), which gained significantly, increased by 34.42% (Rs 10,95,541 crore) from Rs 31,82,803 crore on April 17, 2007 to Rs 42,78,344 crore on April 17, 2008. Among the A group companies, significant increase in M-Cap was seen in the case of MMTC (1166.3%), Jindal Steel & Powe (451.9%), Jai Corp (402.8%), Essar Oil (363.4%), and Reliance Natural Resources (357.9%). A reverse trend was seen in the case of iFlex Solutions (-47%), Shree Precoated Steel (-46.1%), Lakshmi Machine Works (-45.3%), Tech Mahindra (-35.7%), MTNL (-33.8%), and Videocon Industries (-24.1%).

Reliance Industries kept its first rank intact during the last one year. Not only did it keep rank, but it also increased its value by Rs 1,68,795 crore. Another PSU stock ONGC added Rs 26,757 crore to its M-Cap during the same period. NTPC improved its performance during the year and the companys M-Cap increased by Rs 26,715 crore during the period. Some significant growth in M-Cap of some major steel companies was observed on April 17, 2008. They included SAIL, which added a whopping Rs 19,495 crore to its M-Cap, a rise of 38.1% over its April 17, 2007 level of Rs 51,134 crore. JSW Steel notched up a growth of 44.7% in its M-Cap.

Jindal Steel & Power grew on a larger base and added Rs 25,469 crore to its M-Cap during the same period. Its not that only steel stocks showed a significant growth but some NBFCs like Reliance Capital (93.3%), HDFC (57.37%) too showed a improvement in M-Cap. Conversely, some of the biggest falls in M-Cap were noticed in the case of IT companies like Infosys Technologies (-19.9%) and Wipro (-20%).