Painful September: BSE companies lost Rs 14 lakh cr in m-cap, 44 stocks fell 30-70%

The S&P BSE Sensex lost more than 2,400 points, or 6.2 percent, in September — this is the worst fall in the month of September since 2008. In September 2008, Sensex fell by about 10 percent.

The index was in firm grip of bears which pushed it below crucial support levels. The carnage made investors poorer by over Rs 14 lakh crore in market capitalisation.

The m-cap of BSE-listed companies fell sharply to Rs 144,86,401.68 crore on September 28 from Rs 159,34,695.78 crore on August 31 — a fall of Rs 14.48 lakh crore.

The damage was evident in the S&P BSE 500 index, which fell nearly 9 percent, and over 90 percent of the stocks gave negative returns. Data suggests that over 40 stocks in the S&P BSE 500 index lost 30-70% in a single month.

As many as 44 stocks in the S&P BSE 500 index lost 30-70%. The list includes names like Bombay Burmah, Escorts, Vijaya Bank, Edelweiss Financial, Punjab National Bank, HCL Infosystems, Adani Enterprises, Yes Bank, Rolta India, 8K Miles, Infibeam Avenues.

 

Maruti Suzuki, which fell 19 percent, saw its m-cap fall by over Rs 50,000 crore on the BSE, followed by Bajaj Finance (down 24 percent) saw nearly Rs 40,000 crore erased in m-cap, and State Bank of India (down 14 percent) witnessed an erosion of Rs 39,000 crore in m-cap in just 1 month.

The carnage on the D-Street not only wiped market capitalisation but also dented sentiment which reflected in a low rollover for October series.

The Nifty rolls stood at 63 percent viz-a-viz average of 69 percent seen in the last 3 months, while for the Bank Nifty, rolls were at 66 percent viz-a-viz average of 72 percent.

Sectors which took the maximum beating were banks (down 11.8%), auto (down 13.1%), capital goods (down 9.9%), consumer discretionary (down 12.7%), consumer durable (down 11.8%), financials (down 12.8%), realty (down 20%), power (down 10%).

The broader markets, too, saw big cuts. The S&P BSE Smallcap index fell 16 percent, while the S&P BSE Midcap index was down by 12.5 percent in September.

The fall in the indices was led by financials largely because of the weightage they carries in benchmark indices which got immense exposure since demonetisation, suggest experts.

“Since demonetisation, the herd mentality had jacked up financials, banks and NBFC stocks to great heights on the pretext of financial inclusion and formalisation of the economy. This led to the financials gaining disproportionate share in Nifty50 at 35% of the free float market capitalisation which was unheard of in the past,” Jimeet Modi, CEO & Founder of Samco Securities & StockNote said.

“But, there are other stocks that are currently available at reasonable valuations and give good opportunities to accumulate, but somehow the market scare created by crowd behaviour has overpowered rational thinking and has hijacked the sensibilities of investing at cheaper valuations. Investors should, therefore, make use of this opportunity to accumulate shares rather than selling,” he said.

Trade war woes, rising global crude oil price which breached $83/bbl level, rupee depreciation against USD at a record level near Rs 73/USD, liquidity concerns in NBFCs, hike in interest rates by US Fed rate, and rising concerns around weak macros are some of the factors which took a toll on markets.

“The index and stocks start on relatively lower total future open interest in October. The Nifty open interest (OI) is lower by 29 percent while Bank Nifty OI is down by about 18 percent compared to total open interest at the beginning of September expiry,” Shubham Agarwal, CEO & Head of Research at Quantsapp told Moneycontrol.

“The Nifty option Put Call Ratio – Open interest wise corrected sharply in September series from high of 1.80 to 1.2. The October series too started with OI PCR of 1.12 which indicates that Put and Call writers are equally distributed in Nifty leaving less room for any trended movement to pick up,” he said.