Equity mkt at 28-month low, loses trillion-dollar tag

Last Updated: Tue, Dec 20, 2011 19:21 hrs

India can’t boast of a trillion- dollar equity market anymore. After on Tuesday’s sharp fall in stock prices, the market capitalisation of the Bombay Stock Exchange fell to $994.6 billion. BSE is the second market to lose the trillion dollar tag this year.

South Korea, which had started the year with a market cap of $ 1.07 trillion, has lost 14 per cent this year and is trading with a value of $ 926 billion.

India, caught in a double whammy of falling stock prices and a crashing rupee, has lost 39 per cent of the $1.62 trillion it started the year with. This makes it the worst performer among the 13 countries that started 2011 as trillion-dollar markets. Germany, Australia, Brazil and Switzerland, valued lower than India at the beginning of the year, are holding on to the tag, having fallen much less. The Bombay Stock Exchange benchmark Sensex and the S&P CNX Nifty fell for the fifth straight session, to close at its lowest level in 28 months, in the absence of policy initiatives to tackle growth slowdown. The BSE has lost Rs 20,00,000 crore in market capitalisation in 2011.


Market cap in ($billion)

31-Dec 19-Dec Change % change
India* 1,628.87 994.60 -634.27 -38.94
France 1,758.72 1,342.60 -416.12 -23.66
Australia 1,484.03 1,157.95 -326.09 -21.97
Germany 1,502.18 1,201.08 -301.10 -20.04
Brazil 1,445.11 1,167.70 -277.41 -19.20
Hong Kong 2,485.18 2,074.01 -411.17 -16.54
China 3,759.13 3,186.08 -573.04 -15.24
Japan 3,996.76 3,393.94 -602.82 -15.08
Canada 2,102.25 1,789.12 -313.13 -14.90
South Korea 1,077.87 926.20 -151.67 -14.07
Switzerland 1,201.28 1,045.16 -156.11 -13.00
Britain 3,336.05 2,924.74 -411.30 -12.33
United States 15,430.85 14,409.62 -1,021.23 -6.62
*Mcap as on December 20
Source: Bloomberg                                               Compiled by BS Research Bureau

The Nifty fell 68 points or 1.49 per cent on Tuesday to close at 4,544, a level not seen since August 2009. The Sensex was down 204 points or 1.33 per cent at 15,175. At on Tuesday’s close, the total market capitalisation of BSE stood at Rs 52,60,441 crore. Larsen and Toubro, top engineering and construction company, which has seen a slowdown in new orders this year, was among on Tuesday’s big losers. The stock fell 5.14 per cent today to close at Rs 979.

“Further downside is not ruled out as buying support is dwindling,” said Amar Ambani, head of research at Mumbai-based brokerage, India Infoline. “Things could improve a bit over the medium to long term, provided the government signals or implements a few important steps to lift the pall of gloom,” Ambani further said.

“The whole India story was built around just one word — growth,” said Jagannadham Thunuguntla, research head at SMC Global Securities. “Now that growth is not there, nobody is interested in this market.”

The main 30-share BSE index shed 1.33 per cent, or 204.26 points, to 15,175.08, its lowest close since August, 2009. All but five of its components ended in the red. Industrial output in India fell for the first time in two years in October, shrinking 5.1 per cent.

The central bank held interest rates unchanged last week after 13 rounds of increases, since early 2010. Pushed to a corner by a series of corruption scandals, the ruling coalition has been unable to reach a consensus on the policy decisions needed to lift investment and growth.

Foreign funds have pulled out a net $300 million from Indian shares this year till last Friday, after ploughing in a record $29 billion in 2010.

The Sensex has lost 5.2 per cent over five sessions, taking the fall to 26 per cent since the start of January and making it the worst performing major stock market in the world. Energy major Reliance Industries, which has about 10 per cent weight on the main index, fell three per cent and Bharti Airtel, the country's largest mobile operator, shed 3.9 per cent. Production cuts announced by European steelmakers this month because of gloomy outlook for demand, weighed on metal makers.

Tata Steel, the world's seventh biggest steelmaker, dropped 5.7 per cent, while Jindal Steel and Power fell 3.8 per cent. Media firm Network18 bucked the trend and rose 6.9 per cent, after a newspaper reported that Mukesh Ambani, India's richest man and head of oil and gas major Reliance Industries, is seeking to buy a stake in the company. A Reliance spokesman, however, said the company was not interested in buying stake in Network18.

The 50-share National Stock Exchange index fell 1.5 per cent to 4,544.20. There were 2.8 losers for every gainer in the broader market. About 573 million shares changed hands.At 1030 GMT, the FTSEurofirst 300 index of top European shares was up 0.4 per cent. World stocks, as measured by the MSCI world equity index, rose 0.3 per cent.

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