In a first since August 2017, Indian stocks' worth falls below $2 trillion

Indian stocks have given up most of their gains for the year, but there may be more pain ahead.

That’s the view of Bank of America Merrill Lynch, whose 32,000 year-end target for the S&P BSE Sensex Index implies another 11 per cent plunge from Wednesday’s close. That would put the gauge 2.5 per cent away from a bear market -- a 20 per cent slide from its Aug. 28 record.

Uncertainties related to oil prices and next year’s federal elections may “keep domestic sentiment and equity flows in check,” Bank of America Merrill Lynch strategists Sanjay Mookim and Nafeesa Gupta wrote in a report Wednesday, maintaining a cautious stance on Indian equities.

The nation’s stock market has lost almost $300 billion of value since August, with concerns over defaults at private lenders adding to those over the impact of rising crude prices and a weakening rupee. It’s now worth only $1.97 trillion, falling below the $2 trillion for the first time since August 2017.

By 10:17 a.m. in Mumbai, the Sensex was down 1.8 per cent, trading at its lowest level since July.

Credit Suisse Group AG also stroke a cautious tone in a note Wednesday, saying there’s too much confidence over the economic expansion and advising investors avoid shares of companies that may fall should the data disappoint.

“We worry that consensus GDP growth expectations are too optimistic as the import bill for the energy needed to drive that growth would turn out to be too high, given slow capital inflows,” Credit Suisse strategists Neelkanth Mishra and Prateek Singh wrote in a note Wednesday.