NEW DELHI: In the first 100 days of Modi government’s second innings, equity indices have witnessed a massive plunge with erosion of more than Rs 13 lakh crore of investor wealth. The total market valuation of the BSE-listed companies stood at 1,54,43,363.95 crore when Modi 2.0 government resumed office on May 30. After months of volatility, the market capitalisation (m-cap) of BSE-listed firms tanked Rs 13,28,047.56 crore to Rs 1,41,15,316.39 crore, as of September 9 (Monday). Indices were closed on Tuesday on account of Muhurram.
The 30-share BSE index plunged Sensex 2,687 points or 6.74 per cent while the broader NSE Nifty dived 943 points or 7.89 per cent since May 30.
Both the domestic bourses battled with the worst slowdown in automobile sector, falling GDP (gross domestic product) amid weak global cues.
“Markets have reacted to weak auto sales data, lower than expected GDP growth number (at 5 per cent) for Q1 FY 2018-19 indicating that slowdown is more pronounced thus demanding for policy measures on both monetary and fiscal side. The recent measures taken by the finance ministry would help mitigate the risk but more is expected to reverse the trend,” Arun Thukral, managing director and chief executive, Axis Securities told news agency PTI.
“News flow from global markets is not conducive either; US-China trade conflict has reached a new high with both the nations continuing to talk but at the same time imposing an additional tariff on goods imported from the other nation,” he added.
Weak core sector growth numbers added to the pressure, said another expert.
Another key reason that impacted the domestic indices’ performance include foreign portfolio investors (FPIs) turning net sellers after finance minister Nirmala Sitharaman, while presenting her maiden Union Budget on July 5, enhanced tax surcharge on super rich. Though, the decision was rolled back but the markets’ behaviour continued to remain strained.
Overseas investors have pulled out more than Rs 30,000 crore from the equities during July-August.
“Despite rollback of FPI surcharge by the government, the selling pressure continued, making it evident that the outflow was due to lack of valuation comfort in the Indian markets and citing signs of the economic slowdown,” Ajit Mishra, vice-president, research at Religare Broking Ltd told PTI.
The finance minister has announced a slew of measures to bring the economy on track but it seems that further guidance is needed.
“I’ve appointed a high-level task force to identify projects for upgrading infrastructure across the country with an investment of Rs 100 lakh crore. This will include greenfield and brownfield projects costing above Rs 100 crore each,” Sitharaman stated on Tuesday.
Listing major achievements of the new government’s in first 100 days, she said creating a robust infrastructure is imperative for a fast-growing economy like India. The initiative will also generate millions of new jobs, Sitharaman added.
(With agency inputs)