India Stratergy : Where Money Flows - August 2023 by Yes Securities
We endeavour to fathom the internals of the recent rally, with Nifty breaking out of the consolidation phase after a gap of 20 months in June. In terms of inflows, DIIs continue to pour money, while FPIs have also shown faith in Indian Equities. Small Caps have driven the recent rally in Markets, with 49% of the stocks witnessing YTD returns above 25%. While 41% of the Mid-Cap stocks have registered YTD returns over 25%. Having said that, there is no euphoria in the markets, manifested by the fact that a very small quantum of stocks is hitting the upper circuit. Moreover, the daily average upside rally in the Top 50 stocks of NSE500 is closer to 4%, which is very much in line with the last 12 months' average. Institutions have more skin in the game, with FPI and DII holdings on the rise. Liquidity risk indicator like Promoter Pledge also doesn’t raise any sort of alarm bells, with pledged shares as a percentage of Market cap moving lower. Primary markets do indicate euphoria as demand for IPO is hitting the roof both on the Mainboard and SME platform. But this can be attributed to lower listing days norms by SEBI which will further come down to bare 3 working days from December 2023.
Through 46 interesting exhibits, we focus on prevalent domestic and global liquidity flows to assess the evolving situation in financial markets. Shared below is our assessment.
India Equity
* Strong demand for Small Cap names brings a Boom in India's IPO market
* Historical Data suggests India Equity Valuations tend to enjoy a premium over other markets
India Debt
* Investors are flocking to Liquid and Money Market Funds Global Liquidity
* A large share of US companies is beating earnings estimate
* EM Debt has done better than EM Equities Commodities
* India's Oil imports from Russia are turning costly
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