Indian investors richer by Rs 10-tn in a year of Lehman fall

Indian investors richer by Rs 10-tn in a year of Lehman fall Mumbai/New York: The world is yet to recover fully from the worst financial crisis of the century, but Indian stock investors have become richer by Rs 10,00,000 crore in the one year since the fall of investment banking giant Lehman Brothers, the first major casualty of the crisis.

In contrast, the counterparts in the US are still reeling under heavy losses as their cumulative stock market wealth is still about 2 trillion dollars (about Rs 100,00,000 crore) below the level seen before Lehman Brothers' collapse.

The loss figure for US stock investors is 10 times that of the gain for the Indians during the same time period.

With a debt of over USD 600 billion, Lehman became the world's biggest ever bankruptcy on September 15, 2008 and its failure is seen by the economists across the world as a seminal event that intensified the global financial crisis.

The investors' wealth in Indian stock market, measured in terms of total market capitalisation of all listed companies in the country, currently stands at about Rs 54,50,000 crore, up from nearly Rs 44,50,000 crore on September 15, 2008 - one of the worst days in the world economic history as it saw over-a-century old institution going belly up.

In comparison, investors' wealth in the US is currently estimated at about 13 trillion dollars, against about 15 trillion on September 15 when the markets had recorded a loss of about USD one trillion dollars in a single day.

However, both the US and Indian markets are way below their record-high levels seen in late 2007 and early 2008 respectively. While the US market had scaled a market capitalisation level of about USD 20 billion at its peak (October 2007), the same in India was over Rs 70,00,000 crore (January 2008). The downtrend had begun in the global markets months before the collapse of Lehman Brothers and continued for some more months later too.

However, the recovery seems to have been faster in India, compared to the US. While the Indian market hit its lowest level of this cycle in October 2008, the same for the US market happened in March. Besides, the Indian markets have nearly doubled since their lowest levels, while the gains in the US from lows have been about 50 percent.

In terms of index levels, the Indian benchmark Sensex, currently trading above 16,000-points level, has recovered nearly 20 percent from the levels seen after Lehman's collapse. The Sensex had slipped to close to 13,500 points in mid-September 2008, and went down even further to touch a low below 8,000 points in October that year.

On the other hand, the US benchmark Dow Jones Industrial Average is currently trading near 9,600 points, still about 12 per cent down from close to 10,000 points in mid-September. The index had plunged to a low near 6,500 points in early March 2009.

Bureau Report