A book cannot be judged by its cover. Similarly, it is difficult to gauge what is happening in the broader market by just looking at the benchmark S&P BSE Sensex. Despite high volatility in the market, the Sensex has managed to recover much of its lost ground after the crash in 2008, but the broader market has not been able to do so.
Sample this: if you had invested Rs100 in the realty index in January 2008, you would be left with only about Rs9 today. The value has been destroyed in the realty index to an extent that if all the shareholders of DLF Ltd, the largest constituent of the index, had sold their shares in January 2008 and assuming there was no price reaction, they would today had the money to buy all the companies in the realty index three times with some cash to spare. Realty is not the only sector where investors burnt their fingers. Even in much diversified indices such as mid-cap and small-cap, Rs100 invested in 2008 would only be worth about Rs55 and Rs38, respectively, today.
However, the story is not the same across the board; investors in the FMCG and healthcare sectors would be better off. If you invested Rs100 in the FMCG index in January 2008, your money would be worth about Rs282 today, a compounded annual growth rate (CAGR) of about 23%; the healthcare index clocked a CAGR of 15% during the same period.
With most indices in the red or showing marginal gains over the last five years and the fact that there is renewed uncertainty in the market, it is unlikely that the picture will improve in a hurry.
Source : Live Mint