India Strategy December 2022 : The Eagle Eye - Global recovery evident on slower pace in rate hikes By Motilal Oswal
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GLOBAL MARKETS
* Major global markets end higher in Nov’22; India continues to outperform YTD’22
* Indian sectoral indices outperform the US counterparts by a wide margin
MARKETS
* Banks, Metals, Tech among top gainers; Autos and Healthcare – laggards in Nov’22
* Among Nifty constituents, 36 close higher in Nov’22. Around 50% of Nifty constituents outperform the benchmark
* On CY22YTD basis, 64% of Nifty constituents trading higher
FLOWS AND VOLUMES
* FIIs continue to be net buyers for the second consecutive month in Nov’22 at USD4.7b after an inflow of USD1b in Oct’22
* DIIs turn sellers of USD0.8b in Nov’22
* Average daily cash volumes accelerate in Nov’22 at INR616b – up 17% MoM and 30% below its Oct’21 high
MACROS
* Real GDP/GVA rise 6.3%/5.6% YoY in 2QFY23, in line with consensus
* Central government spending grows at a 19- month high of 59.5% YoY to INR3.2t
* The 10-year yield spread between India and the US at the lowest since Jun’09
EARNINGS
* Corporate earnings for 2QFY23 above MOFSL expectations, driven by continued strong performance of Financials and lesser-thanestimated losses in OMCs.
* Earnings growth of the MOFSL Universe declines 5% YoY while for Nifty, it stands at 9% YoY (v/s expectations of flattish earnings)
VALUATIONS
* Nifty’s 12-month forward P/E, of 19.9x, at an 8% premium to its LPA of 18.5x
* The 12-month trailing P/E for the Nifty stands at 23.4x, 17% higher than its LPA
* Market capitalization-to-GDP ratio near its FY22 highs
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