Dalal Street regains one-third of losses from recent crash

[N.Sukumar]

After causing a loss of over Rs 25 trillion in the stock market
meltdown beginning early January, bears seem to have taken a break as
select bouts of bullish trend in recent days have helped the market
recover about one-third of these losses.

After hitting a life-time high of about Rs 75 trillion on 7th January,
the cumulative valuation of all the listed firms in Indian stock
market fell to a low of about Rs 48.5 trillion on 24th March.

However, a gain of close to 1,800 points in the benchmark Sensex since
then has helped the total market capitalisation climb back to about Rs
56.9 trillion currently, an analysis of data available with stock
exchanges shows.

This represents a recovery of close to Rs 8.5 trillion from the recent
low, but still marks a loss of about Rs 18 trillion from the all-time
high levels of early this year.

According to marketmen, various projections that the crisis in the
global financial markets have passed its mid- point and the impact
mostly having been accounted for in the huge losses suffered over the
past few months are helping in the recovery process.

The rebounding is even more marked in the benchmark Sensex during the
same period.

After hitting an all-time intraday high of 21,206.77 points on 10th
January, the 30-share barometer index had dipped to a low of 14,677.24
points on 18th March-- representing a loss of more than 6,500 points.

In terms of closing level, the Sensex had scaled an all-time closing
high of 20,873.33 points on 8th January, while it fell to a low of
14,809.49 points on 17th March.

This also marked a plunge of more than 6,000 points.

With a gain of over 400 points, the Sensex on Friday -- the latest
trading day in the past week-- regained its 17,000 level and settled
at 17,125.98 points.

This marks a recovery of over 2,300 points from this year's lowest
closing, but the index still remains more than 4,000 points below its
life-time high.

However, most of the investors are keeping their fingers crossed and
the recent disclosures by various banks in India about their marked-to-
market losses and provisioning for any future losses due to the
turmoil in global financial markets could lead to further downward
pressure, said a broker.

While some value-buying by foreign institutional investors (FIIs) as
well as domestic institutional investors has helped in reviving the
bullish sentiments in the past few days, the positive impact has also
come from robust quarterly results reported by heavyweights like
Reliance Industries, Bharti Airtel and Infosys.

At the same time, relatively disappointing results from the likes of
TCS, huge provisioning made by the banks and inflation continuing at
higher levels are adding to the woes, brokers said.

According to market experts, the future movement on the bourses would
depend on a host of factors, ranging from interest rate regime policy
meetings in India as well as the US, the inflationary pressures,
corporate results and the developments on the global subprime crisis
ripple effects.

Both Reserve Bank of India and the US central bank, Federal Reserve,
are set to meet next week to decide on their future course of action
on interest rate fronts.

Meanwhile, while the bulls would try to add momentum to the recent
recovery, those in the bearish camp could seek to renew their attack
with further selling pressure by booking profit from the recent
gains.

N.Sukumar
Research Analyst