Investor wealth erosion after budget tops ₹10 trillion

The wealth of the investors in the Indian equity market has eroded by over Rs 10 trillion since the Budget day on the back of continuous flow of the foreign investors.

A DH analysis of data available with Bombay Stock Exchange (BSE), the overall market capitalisation of all the companies listed on it has come down by a whopping Rs 10.33 lakh crore, since the budget day. A day prior to the budget, on June 4, the total m-cap of all the BSE listed companies stood at Rs 153.58 lakh crore. On Wednesday's close, the market cap of all BSE listed companies stood at Rs 143.25 lakh crore -- down 6.7%. To give the magnitude of the issue, the equity investors have lost an average of Rs 73,814.1 crore every day.

There are 4,723 companies listed on BSE as of date, of which 634 have been suspended from trading while 4,089 are being traded.

The markets have seen a bearish sentiment post-budget, that has resulted in a loss of over 5% to the BSE's 30-share index Sensex. The markets have been facing the wrath of the foreign portfolio investors (FPI) and foreign institutional investors (FII), who are upset at the government increasing the surcharge on the "super-rich".

"The super-rich tax surcharge on FPI had a big negative impact. Moreover, continued FIIs selling, poor quarterly results and below-normal monsoon have dampened the sentiments. FIIs have been net sellers of over Rs 100 billion during the month of July," Siddhartha Khemka, Head of Retail Research, Motilal Oswal, said.

The foreign investors since the budget day have pulled off over Rs 10,400 crore from the Indian equity markets.

The analysts are expected the market to be chaotic in the coming days as well. "Going forward, Market is likely to remain under pressure due to lack of positive triggers. A lot of hope is now on the US Fed to cut interest rates which could support emerging markets including India. A major factor from the ongoing result season has been the management commentaries, which appeared cautious for the next 1-2 quarters,” Khemka added.

In such a scenario, experts are advising the investors to diversify their portfolio. "Investors will do well to look at a serious diversification within their portfolios and we may just see a 'flight to safety'," Anubhav Srivastava of Infinity Alternatives said.