From January 2008 till now, over 300 companies have shed 90% value
Mumbai: Shares of DLF Ltd, Financial Technologies (India) Ltd (FTIL), Suzlon Energy Ltd, Jaiprakash Associates Ltd, RelianceCommunications Ltd, Moser Baer India Ltd and Karuturi Global Ltd have seen an over 90% erosion in value since 2008, making them major wealth destroyers in recent times.
BSE’s benchmark 30-share Sensex is up 32.85% since 8 January 2008—when it touched a then-closing high of 20,873.33 points—to 27,730.21 points on Monday.
That 2008 high was the peak of a bull market that started in mid-2003, although investors didn’t know it then. It was too good to last.
By 21 January, the mood changed dramatically and the BSE Sensex plummeted 7.4%—its biggest single-day decline ever—as concerns over a possible US recession overwhelmed the market.
There are 303 such wealth destroyer stocks, which have shed more than 90% of their value since then, and 219 of them are mere penny stocks now with the current price at Rs.10 or less, after a much-hyped past.
Then again, it isn’t all bad news. There are 469 stocks that have returned more than 100% in the same period.
The erosion in value was flagged on Twitter by stock trader Prashanth (@Prashanth_Krish), among others, on 16 June: “On the day Nifty hit its high for 2008, Koutons traded at Rs.1,000. Today, it trades at Rs.2.45.”
Market experts said most of the companies that have lost value are those that rode the wave but lacked sound fundamentals. While some had too much debt on their books, others lacked liquidity or a crisis engulfed them.
Investors said it was difficult to spot these stocks initially. But, over a period of time, piling debt and huge volumes without corresponding change in fundamentals were key to identifying such wealth destroyers.
