The increase in number of stocks hitting new lows reaffirms the fact that equities are fast falling out of favour with investors. Of the 3,382 companies listed on the Bombay Stock Exchange,more than a fourth or 27 per cent have already seen their share price plunge to a four-year low in 2011. While the number of such stocks is nine times higher than that in 2010,it is also way higher than that in 2008,when the last bear market started and benchmark indices lost close to 50 per cent. In 2008,around 850 companies (25.1 per cent) made a four-year low while last year it was less than 100. The Sensex hit a lifetime high of 21,005 in early November last year. Further,almost two third of these stocks have fallen to their four-year lows in the last two months,reflecting the weariness amongst investors in a tough economic environment of high inflation and slowing growth. The rupee has depreciated sharply against the dollar,losing 17 per cent since August,prompting foreign funds to sell. The governments inability to push through major reforms and the lack of a solution to the worsening European debt crisis have also weighed heavy on the market sentiment in the last two months. Not surprisingly,most of stocks belong to the mid- and small-cap space. The BSE small-cap and BSE mid-cap indices have hugely underperformed the large-caps with a fall this year of 30 per cent and 39 per cent compared with a fall of 22 per cent in the Sensex. Of the 75 companies of the BSE 500,which saw their prices decline to a four-year low in 2011,as many as 63 are small and mid-cap companies. Of the 12 large-cap scrips from the BSE 500,Reliance Power,Adani power and GMR Infra belong to infrastructure and power sector; two stocks namely,the ADAG groups Reliance Communications and Reliance Power,are constituents of the Nifty. Indian equities have been unpopular with Foreign Institutional Investors(FIIs) for the better part of 2011 with fund managers remaining underweight on the market. Compared with inflows of nearly $30 billion in 2011,FIIs have been sellers this year. As for retail investors they have stayed away altogether; all in all volumes in the cash segment have been weak with investors hesitating to take delivery of their purchases and preferring instead to simply trade. For the nine months between April and December 13,2011,the average daily turnover on the National Stock Exchanges cash segment was down 23 per cent as compared to 2010-11. FE
