India Strategy - The Eagle Eye: Indian market among the leaders in August 2022, continues to outperform YTD By Motilal Oswal Financial Services
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CONTENTS
GLOBAL MARKETS
* Indian market among the leaders in Aug’22, continues to outperform
* India stands out, outperforming global markets YTD
MARKETS
* Top gainers among global cyclicals; Technology and Healthcare were the weakest in Aug’22
* Among Nifty constituents, nine closed lower in Aug’22. Around 28 constituents outperformed the benchmark
* A majority of BSE-200 constituents (81%) ended higher in Aug’22
FLOWS AND VOLUMES
* FII inflows at the highest since Jan’21, DIIs turn sellers after 17 months of buying
* Average daily cash volumes rose 28% MoM to INR636b in Aug’22. However, it is still 28% lower from its Oct’21 high
* Monthly institutional cash trading volumes rose 12% MoM to INR5.9t
MACROS
* Indian bond yields at 7.2%. The spread between Indian and US bond yields stood at 4% – the lowest since Feb’17
* On the currency front, the INR declined by 0.25% MoM v/s the USD
* India’s forex reserves declined by USD78b from its Oct’21 peak to USD564b
COMMODITY PRICES
* Commodity inflation cools off from its recent highs, but remains volatile
* Crude Oil prices trade significantly lower from its Mar’22 high
* HRC prices fall 25% from its Apr’22 high
* TMT prices fall 22% from its Apr’22 high
VALUATIONS
* Nifty 12-month forward P/E, at 19.6x, is at a 6% premium to its LPA of 18.5x
* The 12-month trailing P/E for the Nifty stood at 22.8x, 14% higher than its LPA
* India’s market capitalization-to-GDP ratio is currently at 107% (of FY23E GDP), above its long-term average of ~81%
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