Investors lose Rs 4.4 lakh crore in four days

Equity investors, including promoters, have become poorer by Rs 4.4 lakh crore in just four trading days after the Central Bureau of Investigation (CBI) initiated raids on senior executives of banks and housing finance companies to unearth the alleged bribes-for-loans scam.

The erosion in the market cap has been Rs 810,616 crore from the all-time high level of November 4.

As many as 500 stocks have touched a 52-week low in the past four days. Reliance Communications, MTNL and NHPC were among the 85 stocks that hit all-time lows on the Bombay Stock Exchange (BSE).

The market seems to have over-reacted, says Motilal Oswal, chairman and managing director of Motilal Oswal Securities. He said the significant correction in the past couple of weeks had provided opportunities for value buying. The bottom-fishing, however, should not be done randomly, he added.

Mid-cap and small-cap stocks were hammered the most. BSE mid-cap and small-cap indices fell over six per cent, compared to the four per cent fall in the benchmark index, the Sensex, on fears that foreign institutional investors (FII) might exit the scam-hit companies. FIIs have sold shares worth Rs 3,803 crore in the past four days, according to provisional data from the stock exchanges.
 

TOP LOSERS
BSE  indices	As on 26-Nov 2010	% chg*	Stocks	As on  26-Nov Price in Rs	%  chg*
Realty	2,742.81	-15.27	D B Realty	211.75	-37.69
Small-cap	9,515.93	-8.39	HCC	40.1	-31.22
Metal	15,414.98	-7.5	LIC Housing	932.1	-27.92
Mid-cap	7,612.49	-6.94	Indiabulls Real	136.05	-24.21
Cons Durables	6,202.59	-6.35	HDIL	178.65	-22.48
*Change over November 22

Real estate and infrastructure stocks were hit the most on concern that property prices may slump as the scam affects bank funding for the sector. Bankers might turn cautious in sanctioning fresh loans, forcing builders to cut prices to improve cash positions, said an analyst.

The BSE Realty index has been the biggest loser among the sectoral indices, down 15 per cent in the last four sessions, followed by oil and gas, metal, consumer durables, power, Bankex and the capital goods index, which have fallen between five per cent and eight per cent. FMCG, auto, healthcare and technology indices declined by one to four per cent.

Most frontline real estate and infrastructure stocks like Unitech, DB Realty, HDIL, Indiabulls Real Estate and HCC fell more than 14 per cent each and closed at 52-week lows. LIC Housing Finance, Adani Enterprises, BGR Energy, Jaiprakash Associates, Suzlon Energy, Jaypee Infratech and Central Bank of India, a few companies involved in the scam, declined between 14 per cent and 28 per cent on BSE.