Investors in Indian equities have had little to cheer after stocks hit all-time highs in January.
The Nifty has fallen over 9 percent since its peak on a global sell-off and as bank stocks, with the largest weight in the index, fell after India’s second largest public-sector lender reported a nearly Rs 13,000-crore fraud. Macro-economic and political uncertainty added to the slide.
These five charts explain why investors turned bearish.
A global sell-off contributed to a correction in Indian markets. Equity benchmarks across Asia and Europe have given negative returns since January 29, led by Nikkei 225. Brazil’s Ibovespa is the only major index to stay in the green.
The correction in India is broader. Small-cap, mid-cap indices have declined more than Nifty 50. India VIX, or the measure of volatility, fell over 11 percent since its January high, indicating that fewer investors are willing to pay a premium.
The fraud at Punjab National Bank dampened the optimism triggered by the Rs 2.11 lakh crore recapitalisation plan announced by the government last year. The Nifty PSU Bank index emerged as the top sectoral loser on the National Stock Exchange since January. Metal, realty and pharma index also failed to buck the downtrend.
Metal and bank counters led the list of losers among Nifty 50 stocks.
The overall gloom eroded market value of blue-chip listed companies, led by Tata Consultancy Services, State Bank of India and Reliance Industries Ltd. Investors lost more than Rs 70,000 crore in Asia’s largest software services provider.
Vakrangee Ltd., which rose 207 percent in 2017, failed to enthuse investors this year. The stock has given negative returns of 46.8 percent since January 29.
Overseas investors took out Rs 2,931 crore funds from India while domestic institutions pumped in over Rs 19,000 crore.