Global crisis swallows 43% investor wealth
The Financial Express – Corporates & Markets, April 1, 2009, P VIII
PK Dey, Mumbai
The year 2008-09 has been a bad year for investors with more than 43% erosion in their wealth taking place during the year.
US subprime crisis, higher inflation and world economic crisis were responsible for this erosion. Investors have lost Rs 22.77 lakh crore in their wealth in the last 243 trading sessions on the Bombay Stock Exchange during 2008-09.
Harish Menon, ED, H-Zone Capital Management, said, “FY2009 has been nothing short of a disaster for risky asset classes across the global financial markets. Rising interest rates coupled with drying up of market liquidity triggered a largescale sell-off in Indian equities despite relatively better economic fundamentals.”
“With most sectors and stocks trading at near life-high valuations, flight to safety resulted in a massive correction in prices and valuations of most stocks,especially those in the real estate and commodities-related sectors, were the biggest beneficiaries of the liquidity deluge of the preceding few years,” he added.
The total BSE M-Cap has decreased to Rs 30.58 lakh crore on March 31, 2009, from Rs 53.35 lakh crore on April 1, 2008. Also, on the National Stock Exchange, the M-Cap decreased by Rs 21.61 lakh crore to Rs 28.90 lakh crore from the level of Rs 50.52 lakh crore on April 1, 2008. During the 12 months of 2008-09, the highest decline and increase was seen in the month of October and April respectively.
The Sensex decreased by 5918.12 points to 9,708.50 on March 31, 2009 from 15,626.62 on April 1, 2008. The Nifty, on the other hand, decreased by 1,718.60 points to 3020.95 from its previous level of 4739.55 on April 1, 2008.
A sectoral analysis shows that while the construction sector in terms of market cap has decreased by 71.07% during the study period, the erosion of sectors like retailing, shipping, media, steel, food-processing, jewellery and oil drilling/allied services have been far higher in losing overall market cap values. In contrast, FMCG, cigarettes, pharmaceuticals were laggards, and saw a lower erosion in market cap compared to April 1, 2008.
Among the major industrial houses, significant decrease in M-Cap was seen in the case of K K Birla, Essar, Jaiprakash Gaur ,UB, ADAG, Shiv Nadar, Godrej, Jindal Om Prakash, Subhash Chandra and Brij Mohan Thapar. The M-Cap of the Reliance Industry Group led by Mukesh Ambani decreased by 36.5% from Rs 4.45 lakh crore to Rs 2.83 lakh crore during the study period. The M-Cap of 196 A group firms, which lost significantly, decreased by 53% from Rs 57.28 lakh crore to Rs 26.82 lakh crore on March 31, 2009. Among the A group companies, significant decrease in M-Cap was seen in the case of NMDC, Unitech, Jai Corp and Suzlon Energy . A reverse trend was seen in the case of Spice Communications, Hero Honda Motors, Lupin,Castrol and Colgate Palmolive. Reliance Industries kept its top rank intact in 2008-09. But it lost its value by Rs 1.29 lakh crore. Among the PSU stocks, ONGC lost Rs 0.49 lakh crore to its M-Cap during the same period. MMTC lost significant amount in M-Cap, which decreased by Rs 37,956 crore during the period.
The Financial Express – Corporates & Markets, April 1, 2009, P VIII
PK Dey, Mumbai
The year 2008-09 has been a bad year for investors with more than 43% erosion in their wealth taking place during the year.
US subprime crisis, higher inflation and world economic crisis were responsible for this erosion. Investors have lost Rs 22.77 lakh crore in their wealth in the last 243 trading sessions on the Bombay Stock Exchange during 2008-09.
Harish Menon, ED, H-Zone Capital Management, said, “FY2009 has been nothing short of a disaster for risky asset classes across the global financial markets. Rising interest rates coupled with drying up of market liquidity triggered a largescale sell-off in Indian equities despite relatively better economic fundamentals.”
“With most sectors and stocks trading at near life-high valuations, flight to safety resulted in a massive correction in prices and valuations of most stocks,especially those in the real estate and commodities-related sectors, were the biggest beneficiaries of the liquidity deluge of the preceding few years,” he added.
The total BSE M-Cap has decreased to Rs 30.58 lakh crore on March 31, 2009, from Rs 53.35 lakh crore on April 1, 2008. Also, on the National Stock Exchange, the M-Cap decreased by Rs 21.61 lakh crore to Rs 28.90 lakh crore from the level of Rs 50.52 lakh crore on April 1, 2008. During the 12 months of 2008-09, the highest decline and increase was seen in the month of October and April respectively.
The Sensex decreased by 5918.12 points to 9,708.50 on March 31, 2009 from 15,626.62 on April 1, 2008. The Nifty, on the other hand, decreased by 1,718.60 points to 3020.95 from its previous level of 4739.55 on April 1, 2008.
A sectoral analysis shows that while the construction sector in terms of market cap has decreased by 71.07% during the study period, the erosion of sectors like retailing, shipping, media, steel, food-processing, jewellery and oil drilling/allied services have been far higher in losing overall market cap values. In contrast, FMCG, cigarettes, pharmaceuticals were laggards, and saw a lower erosion in market cap compared to April 1, 2008.
Among the major industrial houses, significant decrease in M-Cap was seen in the case of K K Birla, Essar, Jaiprakash Gaur ,UB, ADAG, Shiv Nadar, Godrej, Jindal Om Prakash, Subhash Chandra and Brij Mohan Thapar. The M-Cap of the Reliance Industry Group led by Mukesh Ambani decreased by 36.5% from Rs 4.45 lakh crore to Rs 2.83 lakh crore during the study period. The M-Cap of 196 A group firms, which lost significantly, decreased by 53% from Rs 57.28 lakh crore to Rs 26.82 lakh crore on March 31, 2009. Among the A group companies, significant decrease in M-Cap was seen in the case of NMDC, Unitech, Jai Corp and Suzlon Energy . A reverse trend was seen in the case of Spice Communications, Hero Honda Motors, Lupin,Castrol and Colgate Palmolive. Reliance Industries kept its top rank intact in 2008-09. But it lost its value by Rs 1.29 lakh crore. Among the PSU stocks, ONGC lost Rs 0.49 lakh crore to its M-Cap during the same period. MMTC lost significant amount in M-Cap, which decreased by Rs 37,956 crore during the period.
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