India Strategy - The Eagle Eye: Resilience in earnings drives markets performance By Motilal Oswal
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The Eagle Eye: Resilience in earnings drives markets performance
* In our Jan’22 edition of ‘The Eagle Eye’, we highlight: a) Sixth consecutive year of positive returns in Nifty b) Reduction in pace of liquidity addition by G4 Central Banks c) Nifty performance during earlier cycles of US monetary tightening, d) Normalization of Nifty earnings growth multiplier to Nominal GDP growth, after half a decade of lost earnings and e) Resilient trajectory Nifty FY22/FY23E EPS during CY21, despite several headwinds
* India outperforms MSCI EM index in CY21 by 27%. Nifty CY21 performance was the best in the past four years
* Incremental G4 central banks’ balance sheet size expansion has declined in the past four months. G4 Central Banks CY21 B/S expansion declined to an average of USD187b from USD704b in CY20.
* BSE500 companies net debt has declined by 7% YoY in FY21 and net debt/equity has moderated to 0.59x vs. 0.73x in CY20.
* Earnings multiplier (Nifty EPS growth/nominal GDP growth) for FY18-23E is expected to mean-revert after declining over the past one and a half decade.
* Our research team has released several interesting coverage reports in Dec’21. We have highlighted some of these – Apollo Hospitals, Eris Life Science and Indigo Paints – in our presentation.
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