The frontline indices Sensex and Nifty have plunged 37 per cent so far in CY20, owing to the meltdown in markets triggered by the coronavirus pandemic. The fall has wiped off nearly Rs 54 trillion in market capitalisation of BSE-listed companies.
Rakesh Jhunjhunwala and family — the big bull of the equity markets — has lost Rs 4,558 crore in CY20 so far, with the value of their investments slipping below Rs 10,000 crore. Based on Monday’s closing, the Jhunjhunwala family’s total investments in listed companies stood at Rs 8,021 crore, down 36 per cent from the Rs 12,480 crore at December-end.
According to the latest shareholding figures, these investors have taken a sharp hit in their holdings in mid- and small-cap firms where they held an over one percentage point stake, on account of the correction. The mid-cap and small-cap indices have slipped 35 per cent during this period.
For instance, Rakesh Jhunjhunwala and wife Rekha Jhunjhunwala have seen value erosion of Rs 2,314 crore in their Titan stake. They hold 6.69 per cent in the firm. The Titan scrip has slipped 33 per cent to its 52-week low of Rs 775.
Jhunjhunwala’s investment in Titan, based on the December 2019 quarter’s shareholding pattern, now stands at Rs 4,740 crore.
NCC, Delta Corp, Karur Vysya Bank, Aptech, and Jubilant Life Sciences are among stocks in Jhunjhunwala’s portfolio that have taken a severe hit, falling more than 50 per cent during the period.
Anil Kumar Goel and Seema Goel, who hold stocks of sugar companies such as Dhampur Sugar Mills, Triveni Engineering and Industries, Dwarikesh Sugar Industries, and Uttam Sugars in their portfolio, have seen average value erosion of 54 per cent to Rs 405 crore.
On the other hand, investors such as Ashish Dhawan, Ashish Ramchandra Kacholia, and Dolly Khanna have seen their portfolio value dip between 44 per cent and 50 per cent in CY20.
While the jury is still out how long the health scare will continue to impact the markets, analysts at ICICI Securities say the real impact will come from the demand side, due to the cascading impact of the slowdown. This could lead to suppressed prices and, thereby, financial growth of most companies.
“Majority of the negative outcomes from Covid-19 in at least the next two quarters are already discounted across global indices. However, any delay beyond that, or a substantial increase in infection, could result in more a negative outcome. Hence, the probability of further downside in equity indices cannot be ruled out,” wrote Chirag Shah and Dhavan Shah of ICICI Securities, in a note.
Meanwhile, valuations of the mid- and small-cap segments have dipped below the long-term averages.
“After the correction, the current price-to-earnings (P/E) of the NSE Mid-cap Index is -33 per cent/-22 per cent, versus its 5/10-yr average. For Nifty, the same stands at -21 per cent/-15 per cent. On the other hand, the current P/E for our Mid-Cap coverage is -27 per cent/-1 per cent versus its 5/10-yr average,” says Sonali Salgaonkar, an analyst with Jefferies.