MUMBAI, DEC 30: It was a let-down for investors. The new millennium raised hopes but stock markets tanked in the latter part of Y2K (year 2000), disappointing investors after a roller-coaster ride. The market which went through the roof in the beginning of the year - thanks to the frenzy in infotech, communication and entertainment (ICE) counters, the star performers of the year - melted as the infotech bubble burst with the western markets, especially Nasdaq, leading the way. The fancied Sensex lost 1033 points, 20.64 per cent, when it closed at 3972.12 on December 29, 2000. This is one of the biggest yearly losses for the market as Sensex had closed at 5005.82 on December 30, 1999. Indian markets followed Nasdaq which lost 39.28 per cent in 2000. Nasdaq had its best year in 1999, when it surged more than 85 per cent. Investors blinded by the lure of instant riches in the new economy world elbowed their way for a slice of the cyber pie, snatching up sizzling tech stocks at any price. But the Internet bubble burst soon afterwards and it was downhill from there on as the gloom over slowing corporate growth snowballed. Starting with small dotcoms, the axe of reality whacked away sector by sector, finally hitting the behemoths of the digital revolution, which tumbled from year highs. The beginning of the new millennium was like a honeymoon with the market going just one way - up and up. This honeymoon lasted till the end of February with the BSE Sensex touching the record high level of 6,150 on February 14. The market capitalisation for most of the new economy stocks which soared to dizzy heights fell to one fifth in just a couple months. This crash, considered to be even worse than the crash of 1992, not only led the networth of some of the billionaires like Azim Premeji and Subash Chandra fall but also took away the shirts of investors on the street. The year was also remarkable as for the first time the share price of some of the companies touched the 5-figure mark. The prominent names to figure in the list included Infosys and Wipro. Even the newly listed stocks created history with media companies also joining the fray. The sentiment in the market was so bullish in the first quarter that fundamentals took a back seat with fund managers brandishing the new economy as the future and ignoring the brick and mortar companies. At a time when most of the ICE companies shares were hitting their new highs, old economy shares moved in the reverse direction and hit their new lows. The intensity of the price fall in old economy stocks continued even after the crash and in October some of the stock even touched their all-time lows. And it needed corporate raiders Arun Bajoria and Abhishek Dalmia to rock the sleeping market. Sadly for the market, the profit warnings by some of the leading global IT companies like Microsoft, Intel, Cisco in US and domestic companies like Mastek and Geomentric Software raised questions on the future growth of the IT sector. This led to re-rating of this sector by the markets - not only in the west but also in the country. The re-rating led to panic selling, especially by FIIs, with all the top run software companies stocks hitting their 52-weeks lows. The poor performance of the economy - falling growth rate, higher inflation and a steep fall in rupee value - added fuel to the bear run. Almost all the top tech stocks in the country's stock markets have taken massive hits in market capitalisation and fell sharply from the peaks which they hit during 2000. The fall was severe in Visualsoft Techno, whose market capitalisation slumped by 92.85 per cent from its peak price level of Rs 10,075 on March 2, 2000, followed by Videsh Sanchar Nigam Ltd (VSNL), which saw a decline of 90.26 per cent in market cap from its peak price of Rs 3,071.90 touched on February 10, 2000. While most of them took major hits in the market cap, Infosys Technologies managed to keep the decline somewhat under check, dipping 32.50 per cent from its peak level of Rs 16,910.20 touched on January 4, 2000. The other major hits were taken by Sri Adhikari Brothers (90.67 per cent), Pentamedia Graphics (87.02), Aftek Infosys (86.81), Mastek (83.54) and Sonata Software (83.28). Wipro fell 75 per cent from its peak levels. The highest market capitalisation was witnessed during the peak periods by Wipro which touched a staggering Rs 2,20,533.96 crore. This has now come down to Rs 55,142.66 crore as on Friday. Infosys, on the other hand, touched Rs 55,922 crore at its peak, and has now come down to Rs 37,747.92 crore. Satyam Computer touched Rs 40,125.81 crore of market cap, which fell to Rs 9.089.47 crore on Friday. With the new economy in dire straits, market players have now begun looking for the tried and tested old economy stocks for comfort. Several public sector shares like MTNL, BHEL, BPCL, HPCL etc. showed dramatic recovery towards the end of the year. Similarly, pharma and FMCG companies also managed to retain their values to some extent. While companies like Reliance also remained firm, Tata companies bite the dust. The year 2001 will hold the key whether this reversal of trend lasts or whether the meltdown in ICE was only temporary. Clearly, the year 2000 belonged to infotech stocks.
