In one month India's Rs 1 trillion club shrinks to 18

The bulk of the erosion in terms of value took place in India’s most-valued firms. For instance, Mukesh Ambani-led Reliance Industries alone has lost Rs 3.8 trillion in m-cap, followed by HDFC Bank, which has seen its value erode by Rs 2.45 trillion and Tata Consultancy Services (TCS), which has lost Rs 1.85 trillion to stand at Rs 6.24 trillion, making it India’s most-valued. 

The coveted club of companies with market capitalisation in excess of Rs 1 trillion has shrunk drastically in the last one month. 

After Monday’s sharp 13 per cent drop in the benchmark indices, there are only 18 listed firms in that club. 

On February 20 -- just before the coronavirus-induced sell-off began -- there were 30 companies with an m-cap of at least Rs 1 trillion. 

Several blue chips such as Axis Bank, Wipro, ONGC, Bajaj Finserv, and Titan have fallen off the list following unprecedented declines in their stocks. 

If the market continues to fall, the list could shrink further, with firms such as Larsen and Toubro (L&T) hanging on to Rs 1 trillion in m-cap with the skin of their teeth. 

On Monday, India Inc’s overall m-cap declined by Rs 14.2 trillion to Rs 102 trillion. Down nearly Rs 59 trillion from the peak, India’s m-cap had stood at Rs 161 trillion on January 17. 

Needless to say, the bulk of the erosion in terms of value took place in India’s most-valued firms. For instance, Mukesh Ambani-led Reliance Industries alone has lost Rs 3.8 trillion in m-cap, followed by HDFC Bank, which has seen its value erode by Rs 2.45 trillion and Tata Consultancy Services (TCS), which has lost Rs 1.85 trillion to stand at Rs 6.24 trillion, making it India’s most-valued. 

At present, RIL has an m-cap of Rs 5.6 trillion, making it the second-most valuable. In November 2019, RIL had become India’s first company to touch Rs 10 trillion in market value. 

Axis Bank, which had an m-cap in excess of Rs 2 trillion about a month ago, is presently valued at Rs 87,000 crore. The private lender is the latest to move out of the club, following a 28 per cent crash in its share price. 

A further 2 per cent drop in the market would lead to India’s overall m-cap falling below Rs 100 trillion. 

India had first crossed that mark in November 2016. 

Interestingly, it took India five years to move from Rs 100 trillion to Rs 160 trillion. However, the reversal has taken only two months. Given the velocity of the latest correction, many experts have termed the current turmoil in the market the ‘worst ever’. 

Experts believe the revival could be steep on account of the economic disruption caused by the pandemic. 

“Indian markets are worst-hit as the rapidly spreading coronavirus pandemic has sent major states, including the country’s capital, into a lockdown. There are increasing fears that the outbreak could bring world economies to a grinding halt. The OECD has warned that the world will take years to recover from the pandemic,” says Deepak Jasani, head (retail research), HDFC Securities.