MUMBAI, June 22: Investors have paid a heavy price in the sustained fall in share prices in the last one month. The total market value of all listed shares -- widely known as market capitalisation in the market jargon -- on the Bombay Stock Exchange (BSE) has fallen by a whopping Rs 1,62,000 crore in a period of two months. In other words, investors have seen an erosion of this amount in their shareholdings.Former BSE president M G Damani says the market capitalisation was Rs 6,22,000 on April 21, 1998 when the BJP government took over and the Sensex was at its 52-week high. By Monday, the market cap has fallen to Rs 4,60,000 crore, thanks to sanctions, downgrading by global rating agencies, Asian market crash and the rupee fall.
Damani also reeled out other figures to show the the losses suffered by investors. As many as 4,037 scrips of the B group on the BSE have not even traded once in the month of May 1998. Indicating the illiquidity on the stock markets, the number of scrips traded once has comedown from 4,600 in January 1997 to 2,989 in May 1998. ``The average daily turnover of B group scrips which was Rs 577 crore per day in December 1994 (when the ban on renewals in the B group was imposed) has fallen to Rs 57.8 crore in May 1998. This is in spite of an additional listing of 2,000 companies in the last two years,'' he said.
After the payment crisis last week, most of the scrips in A and B1 groups are below the 52-week low levels. ``Even fundamentally strong scrips are available at rock-bottom prices. This is the time for small investors to step in and buy at low levels,'' said BSE broker Pawan Dharnidharka. The markets started declining sharply after the US announced the intention to impose sanctions. As on June 10, the market capitalisation has come down to Rs 5,01,891 crore -- wiping out almost four-fifth of the gain and the panic still continues.
The wild swings in Sensex on a daily basis have also created a scare among investors. ``The market is now seems to be out of the range of retailinvestors,'' said a broker.
Criticising the FII selling, Damani said ``But for the effective presence of UTI in the market, aggressive selling by FIIs would have resulted in further drop of 500 points in the Sensex.'' Damani proposed corrective steps like introduction of buy-back of shares, more purchases by banks, LIC and GIC, PSU disinvestment in the domestic market, hike in creeping acquisition limit from 2 per cent to 5 per cent and reduction in long-term capital gains tax to 10 per cent to boost the market sentiment.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
