2007: BSE Sensex crosses 20,000
December 28, 2010The second half of 2007 was a euphoric time for India. The Indian cricket team had lifted the T20 World Cup. And the Bombay Stock Exchange's 30-share Sensitive Index, or Sensex, which had taken a little over two decades to cross 10,000 in February 2006, doubled in just 20 months. As foreign institutional investors or FIIs bought $17 billion worth of equities in the first nine months of 2007, the Sensex crossed 20,000.
The market continued to rally until the end of the calendar year as traders, institutional and retail investors ignored the warning signs: a rise in crude oil prices and the US subprime crisis.
Overall, in 2007, the market capitalisation of the BSE 500 jumped to Rs 65 lakh crore from Rs 33 lakh crore the previous year. The bull rally continued till early 2008 when the Sensex crossed 21,000. It was a steady fall from there until the markets started recovering again in May 2009.
The Rupee on steroids
The deluge of capital inflows saw the rupee hardening against the dollar, hurting exporters. The rupee rose to 39.27 on October 11, 2007 - the highest since February 26, 1998. That shaved off the profits of most export-dependent industries. Even as IT companies registered lower profitability, the Indian textile industry struggled to compete with other low-cost producers such as Taiwan, China and Bangladesh. The textile industry is estimated to have lost some 600,000 direct and indirect jobs in 2007-08.
DLF's Towering IPO
With property prices on fire and a booming economy, real estate major DLF mopped up close to Rs 9,200 crore in the biggest IPO until then in India. More than half a dozen real estate companies, including the likes of Housing Development and Infrastructure, IVR Prime, Omaxe, and Puravankara Projects, followed DLF and collectively raised over Rs 4,800 crore. All these stocks are currently trading below their IPO prices.
Did you know?
The government gave a fi llip to power generation by awarding Ultra Mega Power Projects - Mundra to Tata Power, and Sasan and Krishnapatnam to Reliance Power.