Jittery markets: Investors wealth loss nears Rs 10,00,000 crores

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Published: July 24, 2019 2:26:11 AM

On Tuesday, as many as 34 of the BSE-500 stocks slumped to 52-week low with nearly a third of them coming from auto and financial sectors.

Credit strategists Suisse said cuts in earnings estimates have become much more broad-based in the last six months, with over 75% of the top 150 firms seeing cuts to FY20 estimates.

The loss in investor wealth after the Budget is nudging Rs 10 lakh crore, with a record number of stocks crashing to new lows. Foreign portfolio investors (FPIs) have dumped shares worth $1.4 billion since July 5 — they sold close to $400 million worth of stocks on Tuesday, provisional data showed. The broader market remains in deep distress — nearly 1,300 stocks have hit 52-week lows after the Budget announcement, exacerbating the six-quarter bearish trend. The benchmark Nifty has lost more than 5% since July 5.

The sharp and prolonged slowdown in the economy and poor corporate earnings have prompted investors to pare their portfolios. Credit strategists Suisse said cuts in earnings estimates have become much more broad-based in the last six months, with over 75% of the top 150 firms seeing cuts to FY20 estimates.

“While the aggregate quantum of cuts in the last three months is relatively minor, we expect the pace of cuts to pick up during the 1Q earnings season,” they wrote. Consumption demand is weak as seen from the lack-lustre sales of cars and two-wheelers. The higher surcharge on income of high-income individuals, analysts at Kotak Institutional Equities said, may affect demand for high-end real estate as the additional annual tax outgo is quite substantial at about 25-50% of the annual EMI related to a high-end property. “A further slowdown in sales of residential property may increase the current cash flow problems of certain real estate developers and by extension, the beleaguered housing finance companies,” they cautioned.

On Tuesday, as many as 34 of the BSE-500 stocks slumped to 52-week low with nearly a third of them coming from auto and financial sectors. On Monday the BSE Auto Index and the BSE Small Cap Index hit their lowest levels in the last one year

 

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