Markets lost Rs10 lakh per trading second in FY12

In terms of the cumulative market value of all listed companies, the total investor wealth saw an erosion of Rs6,21,937 crore during the fiscal ended 31 March 2012

More than Rs10 lakh went down the drain at Dalal Street in every second of trade during the fiscal year 2011-12, on an average, as headwinds from abroad tapered the growth momentum of Indian economy and sent the stock markets into a tailspin.

In terms of the cumulative market value of all listed companies, the total investor wealth saw an erosion of Rs6,21,937 crore during the fiscal ended 31 March 2012.

Taking into account a total of 248 trading sessions during the year, the average loss for a day was about half a billion dollars (Rs2,508 crore), while the same for one second of trading stood at about Rs10.7 lakh.

An analysis of market valuation figures for the past decade shows that the losses during the last fiscal, erases almost the entire gains from the previous year.

The losses in last fiscal came after two straight years of gains -- Rs6.7 lakh crore in FY11 and Rs30.8 lakh crore in FY10 -- and were the second highest in over a decade.

During the last 13 financial years, the overall investor wealth of Indian markets has dipped only four times, but the losses were higher only during FY08-09 (Rs20.5 lakh crore).

The losses stood at about Rs4 lakh crore in fiscal 2002-03 and Rs3.4 lakh crore in the fiscal 2000-2001.

In percentage terms, the dip in the investors' wealth, as also the market barometer Sensex, was about 10% during FY11-12. The Sensex lost over 2,000 points in the fiscal, while it fell by about eight points a day, on an average.

The experts feel that headwinds from overseas markets, mostly fuelled by debt crisis in Europe, were the major triggers for the stock market plunge in India. The country's economic growth rate also slowed down to near 6% and the corporate profitability took a hit as well.

The flight, of foreign investors' money, was a key factor, behind Indian markets' downtrend. Given the sharp decline in the rupee value, the losses for overseas investors were, in fact, much higher than the same for domestic entities.

The rupee depreciated by over 14% during FY012, taking the losses for overseas investors to about 22% for the year. The only saving grace for the investors during the year was gold, which appreciated by over 33%.

The silver prices, however, closed the year with a marginal decline of about 0.2% after highly volatile moves throughout the fiscal.

The losses in stock market could have been much higher, but for a smart rally towards the end, especially during January-February 2012. Heavy sell-off by foreign investors caused some jitters and limited the recovery in March.

After a plunge of over 20% in first nine months till December 2011, the Sensex recovered by about 15% between January and February of 2012. It lost the steam in March, but rallied smartly by over 300 points on the last day of the month and the fiscal on 31 March 2012.

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Need for greater focus on state finances: RBI study

“There is a need for greater focus on structural issues confronting state finances, particularly for those states that could not undertake rule-based fiscal corrections prior to the crisis years of 2008-09 and 2009-10,” an RBI study said.

As part of fiscal transparency initiatives, the Reserve Bank of India (RBI) has called for greater attention on structural issues confronting state finances in the country.

“There is also need for greater focus on structural issues confronting state finances, particularly for those states that could not undertake rule-based fiscal corrections prior to the crisis years of 2008-09 and 2009-10,” a RBI study said.

The state governments, it said, need to ensure that their finances capture both explicit and implicit liabilities associated with certain off-budget activities, including project financing undertaken through special purpose vehicle (SPV) or public-private partnership (PPP) mode.

The study also highlighted several issues of significance and concern for the state governments. “Although all the states except Goa have amended their fiscal responsibility and budget management (FRBM) Acts or Rules, most of them do not include provisions for additional disclosures for enabling transparent assessment of state finances.”

According to the RBI, the recommended restructuring of the public expenditure system would enable better management of outlays for effective outcomes.

The report also emphasised on the issues on debt liabilities of distribution utilities and the revision of power tariffs. Besides state finances, the study also referred to issues regarding fiscal consolidation, decline in key expenditure ratios that raises concern on the quality of fiscal adjustment and states’ overall debt-GDP ratio.

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India Yamaha Motor sales up 14% in March

In the domestic market, the India Yamaha Motor's sales stood at 29,819 units in March 2012, against 25,786 units in the same month last year, up 15.64%.

Two-wheeler maker India Yamaha Motor reported 13.92% increase in total sales at 41,886 units in March. The company had sold 36,768 units in March last year, India Yamaha Motor said in a statement.

In the domestic market, the company's sales stood at 29,819 units, as against 25,786 units in the same month last year, up 15.64%. Exports of India Yamaha rose by 9.88% to 12,067 units from 10,982 units in the year-ago period, it added.

“We are pleased with the encouraging response we have been receiving for our deluxe and premium segment bikes such as the YZF-R15 Version 2.0, FZ series and SZ series,” India Yamaha Motor chief executive officer and MD Hiroyuki Suzuki said.

The company is planning to strengthen its sales, service and spares set up in the Tier II and III cities and increase sub-dealers in the rural areas to further boost sales in the coming months, he added.

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