29 December 2011

Investors Lost Rs 20 lakh crore in Stocks this Year

In a departure from big gains in the past two years, investors saw around 20 lakh crore of their wealth eroded as Indian equities tanked in 2011 because of inflation, high interest rates and the uncertain global growth environment accentuated by the euro zone debt crisis.

In addition, the rupee fell to historic lows against the US dollar, hitting the country's import bill. The bellwether indices of the Bombay Stock Exchange as well as the National Stock Exchange fell by over 26 percent during the course of the year, touching new lows.

 The 30-scrip BSE Sensex was down by 5,334.01 points, or over 26 percent, at 15.175.08 on December 20, against last year's close of 20,509.09. Similarly, the 50-share Nifty witnessed a hefty fall of 1,590.30 points, or 25.92 percent, to 4,544.20 on December 20 from last year's close.

There has been some recovery since then, with the Sensex closing at 15,873.95 and the Nifty at 4,750.50 yesterday, but market experts say investors remain cautious on India. Globally, the deepening European debt crisis and a historic downgrade of US creditworthiness hit the economic growth sentiment.

Besides, political turmoil in the Middle East pushed up global crude oil prices, adding to inflationary pressures and pushing up the country's import bill. FIIs, the main drivers of the market, turned negative on Indian equities this year and after having injected a record Rs 1,33,266 crore, or over USD 29.36 billion, in 2010, pulled out Rs 2,497.50 crore, or $318.00 million, from equities till December 19.

Meanwhile, as per Sebi data, they pumped in 39,637.50 crore, or over $8.2 billion, into the debt market till December 19.