Tough ride for investors likely to continue

It has been a rocky ride for stock market investors in the first six months of the present financial year. Going forward, things do not look quite rosy either, at least for the next couple of months.

Worsening debt crisis in the euro zone and fears of a double-dip recession in the US have rattled investors globally. Back home, the Reserve Bank of India’s (RBI) recurring rate rises to tame inflation and government’s slow decision making on key policy issues have also dampened the sentiment.

Not surprisingly, the Bombay Stock Exchange (BSE) benchmark, or Sensex, has lost 15.38 per cent in the last six months, in-line with most of the major global markets. However, the 30-stock index has done relatively better than most export-focused Asian markets and commodity-driven emerging markets during this period. In the last six months, Hong Kong’s Hang Seng index has slumped 25.23 per cent, China’s Shanghai Composite Index has dropped 19.43 per cent and Brazil’s Bovespa has shed 23.71 per cent.

BSE SECTORAL INDICES
	30-Sep-10	%chg*	30-Sep-11	%chg**
Metal	16864.91	-6.17	10995.57	-31.96
Realty	3726.86	13.85	1762.96	-24.56
Power	3235.14	4.84	2125.41	-21.63
IT	5947.07	13.55	5275.23	-19.44
Capital Goods	15995.46	13.59	10742.97	-18.82
BANKEX	14025.04	31.66	10850.73	-18.41
PSU	10279.56	13.73	7403.82	-17.37
Oil & Gas	10446.98	2.83	8494.45	-17.05
AUTO	9527.64	24.20	8498.42	-8.53
Healthcare	5995.71	12.52	5867.80	-2.59
* Over 31 March ‘10, ** Over 31 March ‘11,   Data compiled by BS Research Bureau

Fears of a global slowdown have taken the sheen off metal and information technology (IT) stocks while realty and banking stocks have been hurt due to rate hikes and growing concerns on asset quality. No wonder, the BSE Metal index has led the pack of losers by falling 31.96 per cent. The other big losers in these six months include BSE Reality (24.56 per cent) BSE IT index (19.44 per cent) and BSE Bankex (18.41 per cent). Only, indices representing FMCG and consumer durables have stayed in the green. Returns from these two sectors have been positive, as investors played it defensive. Importantly, these sector represent the country’s domestic consumption story.

TROUBLED TIMES TO CONTINUE
Market experts say that while valuations of the Indian market has corrected significantly, the bleak outlook is making investors wary of taking fresh positions. Analysts attribute this weakness to policy inertia, high inflationary pressure and global weakness.

“India's macro fundamentals have deteriorated and it is difficult to convince foreign investors buy Indian paper,” says Saurabh Mukherjea, head - institutional equities, Ambit Capital, adding that India is simply too expensive with GDP growth numbers slowing over the past seven quarters.
 

MAJOR WORLD INDICES
	Sep 30, ‘10	%chg*	Sep 30, ‘11	%chg**
AMERICA
BRAZIL BOVESPA	69429.78	-1.34	52324.42	-23.71
S&P 500	1141.20	-2.41	1131.42	-14.66
NASDAQ	2368.62	-1.22	2415.40	-13.15
DOW JONES	10788.05	-0.63	10913.38	-11.42
EUROPE
CAC 40	3715.18	-6.51	2981.96	-25.25
DAX	6229.02	1.23	5502.02	-21.86
FTSE 100	5548.62	-2.31	5128.48	-13.21
ASIA
HANG SENG	22358.2	5.3	17592.41	-25.23
SHANGHAI COMP.	2655.7	-14.6	2359.22	-19.43
TAIWAN TAIEX	8237.8	4.0	7225.38	-16.79
KOSPI	1872.8	10.6	1769.65