New Economy M-cap eroded by $9b in as many months
Mumbai: In line with Nasdaq crash, the tech-stocks, which accounted for a high 54 per cent of India’s total m-cap in February 2000, now accounts for less than 30 per cent. India’s m-cap touched an all-time high of Rs. 11,20,000 crore ($260 billion) in February, when the BSE Sensex rose above the 6,000-mark, marked by the euphoria in IT, media and telecom stocks. Currently, the aggregate m-cap hovers around Rs 7,00,000 crore ($151 billion), after loosing $ 9 billion in about last nine months.

The Nasdaq, recorded a sharp fall of 50 per cent from its all-time high of 5,050 in February, as the dotcom bubble burst. Significant de-rating in valuations of technology companies compounded this — especially after they issued profit warnings for forthcoming quarters.
This has adversely impacted the valuations of Indian infotech companies too. In the process, the Nasdaq lost over a trillion dollar in market-capitalisation. Companies like Microsoft, Intel, Cisco Systems, Computer Associates, Apple Computers lost 50 to 60 per cent valuations from the record high in February.

Currently, actively traded TMT stocks like Infosys, Satyam Computers, Zee Telefilms, Wipro and HCL Technologies are quoted at price-to-earning multiples of 40 to 70, against record highs of 160 to 200 in February. The Economic Times’s convergence index, Mindex, which covers over 75 per cent of new economy stocks in India by way of m-cap, has fallen by 61 per cent to 3,460 from an all-time high of 8,875 on February 21, earlier in the year.
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