Investors' wealth erode by Rs.5.86 lakh cr in FY23; Sensex marginally up

New Delhi: Dalal Street investors became poorer by Rs 5.86 lakh crore in 2022-23 fiscal as the equity market faced a tough time in view of plenty of negative triggers such as high inflation, geopolitical conflicts and higher interest rates.

The domestic stock market encountered many headwinds this fiscal such as high inflation, the Russia-Ukraine war, higher interest rates, foreign fund outflows and the recent global banking turmoil.

"In FY23 we have seen events of decadal high inflation, aggressive monetary policy stance by global central banks with respect to interest rate hikes, banking crisis in US and Europe, and continuing Russia-Ukraine war," said Srikanth Subramanian, CEO of wealth management company Kotak Cherry.

Amid the sluggish trend in equities, the market capitalisation of BSE-listed companies fell by Rs 5,86,605.38 crore to Rs 2,58,19,896.00 crore in the entire 2022-23 fiscal.

The main issue facing equity market in FY23 was inflation, which resulted in the increase in interest rates around the world and lowered investor sentiment, said Parth Nyati, Founder of online stock trading app Tradingo.

Concerns over recession and issues with the global banking system made the market even more fragile. Domestic investors' sentiments were also hit by the Adani controversy, Nyati added.

Thanks to the rally on the last trading day of FY23, the 30-share BSE Sensex managed to finish the current fiscal with marginal gains. The BSE benchmark climbed 423.01 points or 0.72 per cent in the financial year 2022-23.

The 30-share BSE benchmark ended the last day of FY23 with a jump of 1,031.43 points or 1.78 per cent at 58,991.52.

"At the global level rising interest rates in the developed world proved to be the biggest headwind. The massive rate hike by the Fed impacted equity and bond prices. In March, failure of three banks in the US and the crisis in the European bank Credit Suisse also impacted markets temporarily, though markets quickly recovered from the shock. In India, the MPC also had to raise rates to contain inflation and capital outflows. This impacted equity markets," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The market capitalisation of BSE-listed firms had reached a record high of Rs 291.25 lakh crore on December 14, last year.

The BSE benchmark hit its one-year low of 50,921.22 on June 17, 2022 and later bounced back to reach it all-time high of 63,583.07 December 1, last year.

"Rising rates by the central banks and high commodity prices were the two main challenges faced by the markets in FY23. Also ebbing of pent-up demand post Covid also created pressure on sales and margins," said Deepak Jasani, Head of Retail Research, HDFC Securities.

Reliance Industries is the country's most valued firm with a market valuation of Rs 15,77,092.66 crore, followed by Tata Consultancy Services (Rs 11,73,018.69 crore), HDFC Bank (Rs 8,98,199.09 crore), ICICI Bank (Rs 6,12,532.60 crore) and Hindustan Unilever (Rs 6,01,201.66 crore).

Investors' wealth jumped over Rs 59.75 lakh crore in the 2021-22 fiscal. The market capitalisation of BSE-listed firms rallied by Rs 59,75,686.84 crore to Rs 2,64,06,501.38 crore in 2021-22 fiscal.