`4L cr investor wealth wiped off in two days
Nearly 1,000 point fall in BSE Sensex over the past two days have wiped out over Rs 4 lakh crore of investor wealth.
Indian market have been facing huge selloff as worries over escalation of trade war hit investor sentiment. The benchmark index slumped 509 points on Tuesday to end at 37,413.
It had lost 472 points on Monday, taking the two-day losses to 976 points.
THE Sensex’s near 1,000-point tumble in the two sessions this week has wiped out more than Rs 4 lakh crore of investor wealth in its wake. The market has seen surprisingly huge sell-off on Monday and Tuesday, as worries over an escalation in trade war and Indian macros hit investor sentiment.
The Sensex slumped 509 points on Tuesday to end at 37,413, while it lost 472 points the previous day, taking the two-day losses to 976 points.
European shares declined while most Asian shares ended lower as the spectre of a Sino-US trade war haunted investors.
The Nifty fell below the 11,300-mark on Tuesday, settling at 11,287, down 150 points.
FMCG, metal, banking and auto stocks led the fall on Tuesday. Titan, Tata Steel, ITC, Tata Motors and Power Grid were among the top losers in the Nifty50 Index, down between 3 per cent and 4.5 per cent.
“We expect selling pressure to set in as the overall equity market appears to have run well ahead of fundamentals, despite the outlook for corporate earnings staying positive, in our view. We advice investors to book profits in Indian equities,” said Jitendra Gohil, head India equity research, Credit Suisse Wealth Management, India.
The domestic market had a good run in the past months despite foreign funds remaining net sellers in stocks. Foreign portfolio investor (FPI) equity outflows in FY19 so far have been close to $2.3 billion.
Domestic MFs were net buyers this month, offsetting net selling by insurers and foreign funds. Flows into mutual funds appear to be abating, but are still in positive territory. Equityoriented mutual funds flows have tapered but continue to remain healthy.
Net inflows in domestic equity-oriented mutual funds in July 2018 were to the tune of Rs 9,700 crore. Total inflows till July FY19 were Rs 49,600 crore.
According to analysts, the market could get into major correction as macroeconomic fundamentals are looking bleak from a falling rupee and rising crude prices.
“Given India runs a current account deficit, it remains vulnerable to bouts of global risk aversion. Higher oil prices and portfolio outflows are its key external vulnerabilities. Aside from these, the key risks stem from the government turning more populist ahead of the 2019 general elections (worsening domestic fundamentals) and a sharper-than-expected domestic growth slowdown (triggering equity outflows),” Nomura said in a report. However, there is general agreement that the long-term India story remains quite robust.
“Markets are trading near 20x CY18 (e) and 17x CY19 (e). These are reasonable multiples especially in view of improving profit growth outlook. Markets thus hold promise over the medium to long term in our opinion. Adverse global events, sharp moderation in equity oriented mutual funds flows and delays in NPA resolution under NCLT are key risks in the near term.
“In view of the above, there is merit in increasing allocation to equities especially in large caps or in staying invested as the case may be (for those with a medium to long term view and in line with individual risk appetite),” HDFC AMC said in a note.