The losses would be even higher, if one were to exclude three big firms – Reliance Industries, Tata Consultancy Services and HDFC Bank – from the sample.
With three-fourths of the BSE500 companies having lost value in the last one year, the combined market capitalisation of the broader index has come off by Rs 2 lakh crore. The losses would be even higher, if one were to exclude three big firms – Reliance Industries, Tata Consultancy Services and HDFC Bank – from the sample. Excluding these three, the market cap erosion would have been to the tune of Rs 6.78 lakh crore.
Subdued corporate earnings, caution ahead of national election outcome and the renewed trade tensions between the United States and China are prompting investors to take risk off the table. On Wednesday, as many as 22 of the BSE-500 stocks slumped to 52-week lows, exacerbating the one-year long bearish trend in India’s stock markets. Stocks such as Cadila Healthcare, Jyothy Laboratories, Apollo Tyres, Bosch, Indiabulls Ventures and Rallies India tested their lowest levels in the past one year.
On Wednesday, the Sensex plunged 487.50 points, or 1.27%, to end at 37,789.13, while the broader Nifty sank 138.45 points, or 1.20%, to 11,359.45. Reliance Industries, Tata Consultancy Services and HDFC Bank together account for 16.5% of the BSE500 market capitalisation. The index which represents nearly 94% of the nation’s market capitalisation, has given up almost 5% from its April highs.
The benchmark indices have gained in value, thanks to just a handful of stocks, including HDFC Bank, Reliance Industries (RIL), Infosys, Axis Bank and ICICI Bank. They have contributed about 3,326 points to the Sensex rally of 2,572.81 points in the last one year with the remaining constituents giving either negative or marginal returns.
Maruti Suzuki, Tata Motors and Vedanta are among the biggest losers; the market value of Maruti Suzuki has eroded by Rs 64,748 crore whereas Tata Motors and Vedanta have seen their market value erode by Rs 47,480 crore and Rs 45,963 crore, respectively, in the last one year.
The Nifty Small Cap index has given up 24.5% over the past year, and 80% of its constituents have lost value. The Nifty MidCap Index has given up 14.5% in the last one year, and 75% of its constituents are in the red. Much of the rally in stocks in 2019 – albeit an extremely narrow one driven by about half a dozen stocks – has been fuelled by FPI (foreign portfolio investors) buying. FPIs have picked up stocks worth over $10.2 billion so far in 2019, against last year’s outflow of $4.6 billion. On the other hand, the domestic institutional investors (DIIs) sold shares worth $ 2.4 billion between January and now, Bloomberg data showed.
The negative sentiment rubbed off on all the sectoral indices. Of the 19 sectoral indices, all posted losses on Wednesday with BSE Energy and BSE Realty falling over 2% each. The overall breadth of the market was sharply negative on Wednesday, with just 634 gainers against 1,857 losers on the BSE. On the NSE, 1,369 stocks ended in the red against 440 stocks closing higher.