India's Market Cap Drops Below $3 Trillion: Here's Why
The obvious factor is the rupee depreciation, which has weakened 5.63% against the dollar since June last year.
India's dollar-denominated market cap dropped below the $3 trillion mark for the first time since June 20, 2022 amid a drawdown in global markets.
The Dow Jones Industrial Average had shed 2,215 points, or 6.56% in June last year as investors struggled to digest hotter-than-expected inflation reports and braced for the Federal Reserve to raise interest rates at a faster pace than anticipated. The rub-off effect was seen on Dalal Street, with Indian markets dropping over 7% in June last year till until 23rd of that month.
Since June 2022 low, however, the Nifty 50 and the Sensex have risen nearly 9.7%. Yet, the dollar-denominated market capitalisation has fallen below the $3 trillion mark. The obvious factor is the rupee depreciation, which has weakened 5.63% against the dollar during the period.
There has also been considerable pain in the broader markets. For example, the Nifty Smallcap 100 has corrected 13.67% since mid-December, though it is up tracking the Nifty since June 2022.
Contributors To The Fall
Banking stocks have been the most resilient since June 20, 2022, with ICICI Bank Ltd. being the biggest gainer.
However, the falls have been pronounced in counters like Reliance Industries Ltd., Adani Enterprises Ltd. and IT majors like Infosys Technologies Pvt. and Wipro Ltd., in the Nifty.
Reliance has been the largest contributor to the market cap decline, with a downtick of over Rs 2 lakh crore in the period. Adjusted for dollar rates to the market cap in June and today at Rs 77.93 to a dollar and Rs 82.3, respectively, it is still the largest contributor to this decline.
In percentage terms since that day, Adani Enterprises tops the list with a 21.5% drop in dollar market cap (adjusted for respective dollar rates), followed by Wipro Ltd. and Reliance, with Infosys, Divi's Lab Ltd. and HDFC Life Insurance Ltd. is among the top six losers.
All eyes will be on the earnings season to see if the mood can change for any of these stocks, especially in the IT sector.