Indian Equity Market – Q4: 2019-2020 The Worst Quarter for Investors

On 16th May 2014, when Narendra Modi was sworn as India’s 14th Prime Minister, BSE Sensex hit an intra-day high of a whooping 25,375 points and closed at 24,121 points. The market registered a CAGR of 10% till January this year. Since then, BSE Sensex pared 70% of its gains earned during the Modi era in just three months. The Coronavirus pandemic, the biggest economic crisis since 2008, has wiped more than one-fourth of the Indian equity market. As of 26th March 2020, the Foreign Institutional Investment (FII) into Indian equities runs in negative numbers. Shares valued more than INR 2,02,000 crores were sold by the FIIs. As a result of this sell-off by FIIs, the benchmark indices were seen dipping below 25% during March 2020.

Indian Equity Market investors have lost INR 42,33,942 crores over the last three months.

Figure 1;Monthly wealth loss by Indian Equity Market investors in INR Source: BSE

On an average, 13 out of the 19 BSE sectoral indices reported a 35% decrease

BSE Metal’s sectoral index declined by 45%, making it the worst-performing sectoral index and BSE Healthcare, the best performing sectoral index, comparatively, reported decline of 10%. This was followed by BSE FMCG and BSE Telecom, whose sectoral indices were declined by 12% and 13%, respectively.

Figure 2 – BSE Sectoral performance Source – BSE

A common trend across major economies except for China

Indian equity market registered a loss of 29% during the current quarter whereas, some major global indices like France CAC , UK FTSE, and Germany DAX have reported a loss of 28%, 26% and 26% respectively, with USA Dow Jones reporting a loss of 23%. On the contrary, Chinese stock markets and Japanese Nikkie able to survive the recent stock market turmoil to an extent.

Figure 3 – Global key indices Source – Google Finance

Reeling under a demand depression with all non-essential consumption dropping, the Indian economy is poised to shrink in the next quarter at an intensity more severe than the demonetization or the GST rollout. The only hope is that the current 21 days lockdown will emerge as a savior or a vaccination to the COVID-19 will bring about a bullish change to the currently bearish scenario.

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