New Delhi: The Indian stock market has emerged as one of the worst performers globally in the first three months this calendar year, with concerns of a possible slowdown in the US economy and a surge in commodity prices impacting sentiments of emerging and developed equity markets, a report says.
Volatile days: The Bombay Stock Exchange building. During the first three months of 2008, equity market in India lost 28.55%, while those in China and Turkey declined 24.65% and 36.62%, respectively.
According to a monthly review by global index provider Standard and Poor’s, or S&P, the world’s emerging and developed equity markets were hit hard during the first quarter of 2008, losing 10.56% and 8.95%, respectively, during the period.
“Near-record commodity prices, 10-year US treasury rates approaching their lowest level, a struggling dollar and the potential global impact of a perceived US recession all fuelled market volatility and uncertainty during the first quarter,” S&P’s senior index analyst Howard Silverblatt said.
Among the emerging world equity markets, 15 of the 26 countries lost ground during the January-to-March quarter this year with India, China and Turkey emerging as the worst performers. During the first three months in 2008, Indian equity market lost 28.55%, while China and Turkey witnessed a fall of 24.65% and 36.62%, respectively.
Emerging markets that managed to give positive returns despite the global concerns include Pakistan, Morocco and Chile, which emerged as some of the best performers during the first quarter.
Pakistan’s stock market has provided a return of 10.25% in the period, Morocco performed robustly giving gains of 23.81% and Chile gave 8.5% positive returns, the S&P monthly global stock market review said.
In March, 10 of the 26 emerging markets gained, producing a weighted decline of 5.11% and an average increase of 3.44%. The variance is due to the Bric countries (Brazil, Russia, India and China) that represent 50.6% of the value.
Brazil, which accounts for 15.3% of the emerging market value, witnessed a loss of 7.99% in March. Both India (commanding 8.4% of the market value) and China (cornering 14.8%) lost 12.4% each in the month. Russia witnessed a marginal drop of 1.60% for the same period.
For the quarter as well, the Bric countries showed notable losses. India reported a 28.6% loss, against a gain of more than 80% in 2007. China was down 24.7% for the quarter compared with 69.8% in 2007, Brazil, which was up 79.6% last year, fell 5.5% for the quarter. Russia dropped 11% in the first quarter of 2008, the report added. While monthly and quarterly performances were mixed for the emerging markets, 12-month returns remain strongly positive with 13 of the 26 markets still boasting an annual return in excess of 25% with only South Africa (down 6.98%) and Turkey (down 3.11%) in negative territory.
In the 12-month period ended on 31 March, the Indian market has gained 31.56% and China 29.57%. The Brazilian market returned more than 57% and Russian 13% in the one-year period.
In terms of the various sectors, eight of the 10 posted losses in March, with only the industrial (0.19%) and consumer staples (2.65%) sectors posting gains.
Among others, telecommunications declined 4.30%, followed by materials at 3.77%, and health care at 3.21%.