Global market cap rose 7.3 per cent ($7.2Tn) over the last 12 months, while India’s market cap jumped 17.2 per cent — Indian equities are trading at their lifetime highs while the emerging markets are 30 per cent away from their peaks
CHENNAI — Global market cap rose 7.3 per cent ($7.2Tn) over the last 12 months, while India’s market cap jumped 17.2 per cent Barring Russia and China, all key global markets witnessed a rise in market cap over the last 12 months, Motilal Oswal Financial Services said in a report.
The Nifty ended higher for the fourth consecutive month in June’23. The index oscillated 737 points before closing 655 points (or 3.5 per cent ) higher MoM at 19,189 – a new peak. The Nifty is up 6 per cent in CY23YTD. Midcaps/smallcaps outperformed largecaps by 3.1 per cent /2.4 per cent in June’23. Similarly, over the last 12 months, midcaps/smallcaps have outperformed largecaps and have risen 35 per cent /28 per cent vs. a 22 per cent rise for the Nifty.
FII inflows are the highest since September’22. FIIs remained net buyers for the fourth straight month at $6.7bn in June’23; YTD inflows stood at $11.2bn. Conversely, DIIs – after reporting outflows in May’23 – saw muted inflows in June’23 at $0.5bn; YTD inflows stood at $10.5bn, the report said.
Among the key global markets, Brazil (+9 per cent ), Japan (+7 per cent ), the US (+6 per cent ), India (+4 per cent ), MSCI EM (+3 per cent ), Taiwan (+2 per cent ), and the UK (+1 per cent ) ended higher in June’23, while Korea (-0.5 per cent ), and China (-0.1 per cent ) ended lower in local currency terms.
Over the last 12 months, the MSCI India index (+17 per cent ) has outperformed the MSCI EM index (-1 per cent ). Over the last 10 years, the former has outperformed the MSCI EM index by 178 per cent, the report said.
After a roller-coaster ride of 18 months, Nifty-50 finally surpassed its all-time high and touched the 19,000 mark in June’23. The feat was not at all easy though! Nifty’s journey from 18,000 to 19,000 took 425 trading days (from October’21-June’23) vs. only 31 days when it covered the journey from 17,000 to 18,000. With healthy macros, range-bound oil prices, a robust fiscal balance sheet and moderating inflation, the outlook for the market looks optimistic, the report added.
Indian markets scaled new peaks on Tuesday
Indian stock markets continued to scale new heights with the Sensex of the BSE and the Nifty of NSE reaching new peaks on Tuesday.
The Sensex of BSE touched a high of 65,672.97 points and Nifty of NSE 19,434.15 points.
The Sensex opened at 65,503.85 points and raced up to reach a 52 week high of 65,672.97.
On Monday, the Sensex had closed at 65.205.05. points. At the NSE, the Nifty opened at 19,406.60 and flared up to a 52 week high of 19,434.15 points.
“We believe the worst of the FIIs outflow is now behind us as the strong earnings growth and economic recovery will play out in the remaining months of 2023. For the next 6-9 months, the evolving macroeconomic data points would continue to influence the market,” said Axis Securities in a report.
Axis Securities said at a base level scenario, it maintain its forecast of 20,200 points for Nifty by December 2023 valuing it at 20 times on December 2024 earnings.
“In the bull case, we value Nifty at 22x which translates into a Dec’23 target of 22,200,” Axis Securities said.
In the bear case, the Nifty is valued at 18x which in turn works out the Dec’23 target of 18,200 points.
India at lifetime high while other emerging markets are 30% away from their peaks
NEW DELHI — Indian equities are trading at their lifetime highs while the emerging markets are 30 per cent away from their peaks.
This is largely a result of strong FPI equity flows (highest among select EMs for four months in a row), pick-up in MF equity flow, benign crude oil prices, sharp progress in south-west monsoon, continued demand traction (with signs of rural and capex cycle recovery), and likely mid-teen corporate earnings growth (with minimal earnings downgrade), Antique Stock Broking said in a note.
Indian equities are trading at 20x 1-year forward P/E multiple (as against a long-term average of 18.4x) helped by strong FPI equity flows (highest equity inflow of USD 3.5 billion among emerging markets in June—the fourth month in a row), pick-up in mutual fund equity flow (Rs 98 billion till 26th June), benign crude oil prices, sharp pick-up in monsoon, resilient domestic macro (as evident from various macro indicators like GDP growth, IIP, GST collection, PMI, e-way bill, electricity demand, petroleum consumption, etc.), and likely mid-teen corporate earnings growth (with minimal earnings downgrade), the report said.
India is at a lifetime high, unlike other emerging markets with almost all sectors indices reaching their lifetime high, the report said.
India continues to trade at above mean valuations and at premium levels relative to global equities. Mid-caps are now trading at average premium levels helped by pick-up in FPI equity inflow into India especially in financial services, industrials, and auto sectors.
Healthy demand accompanied by margin uptick to drive 1QFY24 earnings, the report said. Various high-frequency indicators along with various RBI surveys point to healthy demand traction in 1Q (RBI estimates a 1QFY24 real GDP growth of 8 per cent YoY), which along with lower commodity prices (LME metal index down 17 per cent YoY and Brent crude oil down by 30 per cent YoY), is likely to result in mid-teen corporate earnings.
Most of the sectors are likely to report in-line earnings, with a positive surprise likely in store for oil & gas (due to Russian blending and GRM) and cement (driven by strong volume growth). However, earnings downgrade is likely in consumer durable (due to weakness in volume given unseasonal rains) and agrochemical (due to high channel inventory, pricing pressure, and inventory losses).
Early signs of rural recovery are underway, the report said. Our on-ground interactions suggest that rural markets are witnessing recovery with select FMCG companies witnessing rural growth ahead of the urban markets. Our economic indicators (like the decline in rural inflation, healthy rural wages, robust rabi season, strong agriculture GDP growth, expected normal monsoon, and a healthy uptick in two-wheeler registration) also suggest signs of a pick-up in rural consumption, the report said.
Our analysis of past El Nino years suggests that south-west monsoon may be normal (as seen in 1997) when accompanied by positive Indian Ocean Dipole and negative Eurasian snow cover. South-west monsoon is showing remarkable progress (just 8 per cent below average as compared to 23 per cent below average last week), leading to a pick-up in Kharif sowing.
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