BofA-Merrill Lynch names India as the worst-performing market this year

BofA-Merrill Lynch names India as the worst-performing market this year

New Delhi: A sharp downslide in the stock market has made the investors poorer by more than $500 billion since the beginning of 2011, and the experts fear that losses could mount further in the coming months.

Measured in terms of cumulative value of all listed shares in the country, the total investor wealth in the Indian stock market has dropped from close to 73 lakh crore (about $1.69 trillion) at the start of 2011 to close to 56.9 lakh crore (about $1.1 trillion) currently.

From a 52-week high of 20,664.8 points on 3 January, the first day of trading in 2011, the market benchmark Sensex has fallen to 16,213.46 points now and some analysts foresee the index falling to as low as 14,500 level in next six months.

This would mean a fall of more than 12 months and could erase more than $100 billion (more than six lakh crore) further from the investors’ wealth.

Global financial services major Bank of America-Merrill Lynch has named India as the worst-performing market this year with a fall of about one-third in the US dollar terms.

“... We continue to expect a tough market over the next six months and expect a correction of the Sensex to 14,500 as growth concerns take center-stage," it added.

As a major drag for the market, it listed out concerns like a slowdown in the economic growth, due to slowing global economy, high interest rates and slowing investment demand.

The report, however, talked about a year-end rally in the remaining part of December, as the last month of the year has traditionally been a strong period for the market.

On a good note, BofA-Merrill Lynch said, 2012 as a whole could bring some good news for the market and the Sensec could move to 19,000 level by the end of that year.

“While we see tough times for markets near term, we believe we could end 2012 with a positive return if we see aggressive rates cuts by the RBI and the government takes policy decisions to kick-start investment spend.

“Market will stop panicking when policymakers start panicking...," it added.

The report, however, warned that reforms were necessary for a sustainable rally.

“A slowing domestic economy, regulatory issues as well as the developments internationally have led to poor business confidence in India. We believe a strong policy action by the government is required to get investments moving again," BofA-Merrill Lynch noted.