India Strategy- Chart-book – The Eagle Eye By Motilal Oswal
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Chart-book – The Eagle Eye
In this version of ‘The Eagle Eye’, we highlight (a) the midcap and small cap index outperformance in YTD’ CY21 based on several metrics viz. highest stretch of monthly positive returns, 12-month rolling returns gap v/s the Nifty, relative valuations, and contribution to overall market capitalization, b) heightened activity in primary market issuances in Jun’21, c) the breakdown of Nifty and NSE Midcap 100 five year total returns d) Highlights from our 1QFY22 earnings preview and e) Recovery in high frequency indicators in Jun’21.
* Midcap 100 and smallcap 100 have outperformed Nifty since Mar’20. Midcap 100 and smallcap 100 have delivered 13/8 consecutive months of positive returns. This is the highest ever for Midcap 100 while for smallcap 100 it is the second highest ever.
* ~INR 100bn has been raised in primary markets in Jun’21, ~30% higher vs. May’21. With GR Infra, CleanTech, Zomato, Nuvoco Vistas Cement, Aadhar Housing Finance and others lined up for IPO in July’21,this space is likely to see more action in July’21.
* Component of re-rating has shrunk while earnings growth has been a major driver for Nifty and Midcap 100 index over the past 5 years in their respective total returns over June’16-June’21.
* The earnings for FY22 is expected to begin with a bang with Nifty earnings expected to post 94% YoY growth. However, lockdowns in April and May’21 will result in 19% Q-o-Q contraction in earnings for MOFSL/Nifty universe.
* Macro trends –exports, daily e-way bill generation, gross taxes, imports, auto sales indicate improvement in economic recovery in Jun’21 after lockdowns were eased. Inflation however, remains a key concern.
* Covid-19 cases declined below 500K cases in July’21 along with vaccination pace picking up to 4Mn per day in June vs. 2Mn in May’21..
* Our research team has released several interesting thematic reports in June’21. We have highlighted some of these in the presentation – Initiation on Specialty Chemical sector, BFSI Strategy.
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