India may lose trillion dollar market capitalization tag

MUMBAI: India is on the verge of losing its tag of a trillion-dollar market capitalization country because of the weakening rupee and the slide in the stock market.

On Wednesday, as the rupee closed at 56.01 to a dollar and the sensex ended 78 points lower at 15,948, the lowest level in four and a half months, BSE’s market capitalization was at Rs 57.07 lakh crore, a level not seen since January 12. In dollar terms, this translates to $1.02 trillion.

Either a 1.8% dip in BSE’s market cap to Rs 56 lakh crore, a depreciation of the rupee of an equal magnitude, or a combination of the two can now push India out of the trillion dollar m-cap club.

According to Bloomberg data compiled at the close of trading on May 22, there were 12 countries in the trillion-dollar club. Along with India, Switzerland and Brazil were also the borderline cases in the elite league of countries, the data showed. And among the BRICS countries, while China is at $3.05 trillion, Russia stands at $0.7 trillion and South Africa at half a trillion.

This is not the first time that India, since entering the trillion-dollar m-cap club for the first time exactly five years ago, is threatened with an exit. After its entry into the club in 2007, it reached an all-time high of $1.9 trillion in early January 2008. Thereafter as the global financial crisis unfolded , about 65% of investors’ wealth was wiped out and it fell to a low of just about half a trillion. It rose again to a high of $1.4 trillion on November 4, 2010, the day Coal India was listed after the most successful Indian IPO ever. However, since then it’s almost nearly been a downhill journey.

In Wednesday’s market, the weakness of the rupee continued to take its toll on Dalal Street with the sensex and nifty both closing at levels not seen since their January 9 levels . The sensex, led by a sharp fall in Airtel, closed 78 points lower at 15,948, its first close below the 16K level, while nifty on the NSE closed at 4,836, both are four-and-half-month closing lows for these indices. The day’s selling was also aggravated by fresh fears of Greece’s exit from the Euro currency union, dealers said.