In the run-up to the tournament, the Nifty had declined by 5 percent from its November-2010 peaks, while midcap and smallcap indices had fallen by 17 percent each, noted IIFL Securities
It's a coincidence that will certainly enthuse Indian cricket team fans as Virat Kohli-led Team India prepares to take on New Zealand in the first of the semi-finals at Machester on Tuesday in the ongoing ICC Cricket World Cup 2019.
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A win against New Zealand in today's outing will take Kohli's men one step closer towards the coveted cup. Today's winner will face the winner of the second semi-final match between Australia and England.
Brokerage firm IIFL Securities has pointed at some uncanny similarities between the performance of the country's stock market and Team India's win in 2011. The brokerage house noted that the current stock market situation is similar to what it was in April 2011 when the Men in Blues led by Mahendra Singh Dhoni had won the World Cup.
Here are the salient points from the IIFL Securities report:
April 2011 and July 2019
During the run-up to India World Cup victory in April 2011, the broader Nifty had declined by 5 percent from its November-2010 peaks, while midcap and smallcap indices had fallen by 17 percent each, noted IIFL.
Come July 9, 2019, as Team India is set to play against the Kiwis, the Nifty is down 5 percent from its all-time high. Midcaps are down 19 percent, while Small caps are down 28 percent.
Auto sector also played a role
The auto sector, which is one of the leading indicators of slowdown or bearishness in the market, had declined 7 percent from its peak performance in 2011, IIFL Securities report said.
So far in 2019, the Nifty Auto index is down by 32 percent.
Maruti Suzuki India also seems to be participating in negativity with equal intensity in both phases, said IIFL. In 2011, the stock was down 16 percent from its November-2010 levels. In 2019, Maruti Suzuki shares fell 40 percent from its all-time high.
Key factors for bear markets
In 2011, the market sentiment was hurt by headlines related to the 2G spectrum scandal and scrapping of heavy industry project in the name of the environment, added IIFL.
In 2019, finance minister Nirmala Sitharaman's proposals to levy higher income tax surcharge on FPIs, a 20 percent buyback tax and an increase in minimum public shareholding to 35 percent from 25 percent has dented markets.
What happened next
From April 2011 to December 2011, the Nifty had declined 22 percent, while midcap and smallcap indices had fallen by an additional 30 percent each. The selloffs were triggered after several rating agencies downgraded the sovereign rating of the United States in August 2011, noted IIFL.
Now in 2019, the global markets have started pricing in slower global economic growth due to tariff wars and geopolitical tensions.
"Not to forget that July 2019 marks 10th consecutive year of Bull run in US market, the longest ever...and a correction is long overdue!" said IIFL.