The broader indices in Asia's third largest economy lost over 22 per cent this year, despite of the fact that overall Asian markets performed better than Dow Jones in 2011. China's Shanghai Composite fell around 20 per cent this year, while South Korea's Kospi lost 10 per cent, doing better task than Indian benchmark indices, that were crushed between global weakness and domestic constraints.
The 30-scrip BSE Sensex was down by 4,538.34 points, or over 22.1 per cent, at 15.970.75 on December 27, against last year's close of 20,509.09. Similarly, the 50-share Nifty posted a fall of 1,590.30 points, or 21.6 per cent, to 4,750.20 on December 27 from close of 6,060.35 on December 30, 2010.
The nightmare foreign investors had been the major reason for such a steep decline in Indian markets. According to a data released by SEBI, in 2011, FIIs have pulled out Rs 2,812.1 crore from equities so far till November month, while FIIs had injected Rs 133,266.3 crore in 2010.
Major factor that had put the investors into tizzy included weak rupee, which fell as much as below 54 per dollar, for its lifetime low, and high inflation which made the funds as costlier as they could be within a year time. India's growth fell to 6.9 per cent during quarter ended September 2011, as against 8.4 per cent during the year ago period. Also India's industrial output contracted by 5.1 per cent for the month of October, the worst in over two years.
Now going ahead in 2012, it seems like market conditions are unlikely to improve in first half of 2012, as experts say. Some boosters are needed to revive the markets. Policy paralysis concerns needs to become matter of debate in country. Foreign direct investors need to be encouraged to bring business and employment in country. Interest rates have to be reduced, so as investment activity can speed up. Fiscal deficits needs to be reduced as it hovers above 5.5 per cent against the target of 4.6 per cent.