Four of India’s top business families saw their wealth erode sharply this week amid a stock market rout triggered by concerns of a global slowdown, and a looming bad loan crisis in state-run banks.
While the Sensex ended flat on Friday, up 34 points to 22,986.12, the continued sell-off in the previous days dragged the BSE benchmark down 6.6% during the week starting February 8.
Tata Consultancy Services, India’s largest software exporter, saw its market cap plunge by Rs 39,280 crore to Rs 438,716 crore this week. Reliance Industries saw its market cap tumble Rs 21,339 crore to Rs 2,93,609 crore.
Other major Tata group companies — Tata Motors and Tata Steel — also saw their market capitalisation fall sharply in the week. The promoters have 33.01% stake in Tata Motors and 31.35% in Tata Steel.
Tata Group promoters, which includes Tata Sons and a few group companies, own 73.42% equity stake in TCS. Mukesh Ambani, his family and other promoter groups hold 46.66% in Reliance Industries.
Other companies which saw their wealth erode sharply included Dilip Shanghvi-owned Sun Pharmaceutical Industries, Mahindra and Mahindra, Tech Mahindra and Aditya Birla Group company Hindalco.
The market mayhem this week eroded Rs 6.94 lakh crore in investor wealth.
The losses this week were triggered by a sell-off in most major global markets on the back of global economic growth risks, falling crude oil prices and US Federal Reserve chairperson Janet Yellen’s view on global risks even while keeping options open for further interest rate hikes.
In India, disappointing corporate earnings weighed heavily and there was a sharp sell-off in shares of state-owned banks as non-performing assets and provisions for bad loans rose.
Foreign institutional investors remained net sellers, pulling out `13,380 crore from equity markets since the beginning of January 2016.
“Global concerns are increasing. The first natural reaction to any of the portfolios on this increasing volatility is to go risk-off and that is what we are seeing,” said Vaibhav Sanghavi, MD, Ambit Investment Advisors.
Going ahead, analysts expect markets to remain weak, given the lack of positive triggers.