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As the last closing-bell of 2011 was banged on the stock market, its barometer Sensex took a final knock of 89 points on Friday and ended the year with a total tally of over 5,000 points or a loss of about 25 per cent, the second-worst annual performance in its history.
The total investor wealth, measured in terms of value of all listed stocks in the country, also fell by about Rs 19,46,000 crore during 2011, thus erasing all the gains registered in the previous year 2010.
As has been the case for most part 2011, Reliance Industries Ltd (RIL) was the biggest contributor in today's fall, which saw the stock market benchmark Sensex closing at 15454.92 points for the year.
Incidentally, Reliance Industries today itself lost its position of the country's most valued company to Tata group's software company TCS, thus adding to the concerns that the polyster-to-energy-to-retail conglomerate was fast losing its charm among the stock investors.
A continuing downslide in the banking stocks, largely on concerns about rising bad debts due to a slowdown in economic growth, and apprehensions that the corporate profitability being hit due to increased interest rates and rising input costs also added to the market woes.
As a result, the Sensex fell by a total 5,054.17 points or 24.64 per cent in the entire 2011. In comparison, the index had gained 3,044 points (17 per cent) in the previous year 2010 and by even a wider margin of 7,817 points (81 per cent) in 2009.
The only bigger loss was witnessed during the year 2008, when the Sensex had dropped 52.4 per cent or more than 10,600 points amid a major global financial crisis.
The problems in global economy was seen as a major reason for the downslide in 2011 also, but concerns about domestic economic growth, a perceived notion of policy paralysis and slowdown in corporate sector added to the concerns towards the year-end.
While December has historically been a strong month with some year-end rallies being witnessed traditionally, the situation has been different this time around. The markets today fell for the fourth consecutive day, while the indices have plunged for a majority of trading sessions this month.
As a result, the stock market has ended 2011 with a total investor wealth of Rs 53,48,644.8 crore, the lowest year-end level since 2008.
In the US dollar terms, the Indian stock market's size barely managed to retain the trillion-dollar tag at the end of the year, after briefly moving out of this elite league earlier this month. At the end of today's trade, the market size was ... trillion dollars, just .. per cent away from the mark.
The loss in investor wealth for 2011 is also second highest after a plunge of over Rs 40 lakh in 2008. The investors' wealth had grown by over Rs 12 lakh crore in 2010 and by about Rs 30 lakh crore in 2009.
The NSE's 50-share Nifty index today ended with a 21.95 points fall at 4624.30 points, while it fell by over 1,500 points or 24 per cent during the entire 2010.
Speaking about today's trade, Bonanza Portfolio's Shanu Goel said: "As expected, the markets traded with a negative bias on the final trading day of the year 2011. The short-term trend has become bearish.
"Weakness in heavyweight RIL counter aided the selling pressure as it fell by nearly 3 per cent to trade below Rs 700 levels," Goel said, while noting that jittery sentiments were reflected in other global markets too.
While a section of the market was relieved that a bad year was over for the stocks, a majority were of the opinion that it could be only a wishful thinking to expect a turnaround anytime soon in the new year.
Kotak Wealth Management's Rajesh Iyer said that the volatility and uncertainty could continue in the market. "We are very close to levels last seen during the Lehman crisis. From a valuation stand point the market can slip a maximum 500 to 1000 points but there are more structural headwinds today than was we have witnessed since many years now," he added.
Iyer went on to say that 2012 was going to be more challenging because of the ongoing Euro crisis, while on the domestic front, growth remains muted, interest rates were high, logjam in the political front was there due to many reform bills being yet to be passed.
Angel Broking's MD Lalit Thakkar also said that the the concerns on the domestic and global front would continue to weigh on the market in the near term. He said that the markets might witness some further downside and see 15,000 levels and the crises in Euro-zone, as well as slowdown in the US economy, could pose challenges. He, however, hoped that a final solution to the euro crisis could, and some policy actions back home, could bring an end to the heavy FII sell-off, which has been a major reason for the downslide this year.
The FIIs pulled out a net amount of over Rs 2,500 crore from stocks in 2011, the second highest withdrawal in a more than decade. In comparison, the FIIs had made a net purchase of Rs 1,30,913 crore in 2010 in Indian stocks.
The reason for the FII withdrawal was same as the concerns for domestic investors and included fears of a global economic slowdown, and domestic troubles related to inflation, interest rates, reforms and rupee, the experts said, while hoping for better times ahead.
