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Motilal Oswal Report
After a roller-coaster ride of 18 months, Nifty 50 finally surpassed its all-time high and touched 19,000 mark in June 2023. The feat was not at all easy! This rally has been led by strong combination of healthy macro and micro, complemented by sharp recovery in foreign institutional investment flows.
Strong gross domestic product growth of above 7.2% in FY23, moderating inflation (with headline consumer price index inflation falling to a 25-month low at 4.3% in May 2023), narrowing of current account deficit (to 0.2% of GDP in Q4 FY23), stable crude prices, stable exchange rates and global interest rates nearing its peak, are some of the key macro drivers.
Conversely, solid growth in corporate earnings (Nifty earnings up 10% in FY23 on a high base of 34% in FY22) and expectations of high-teens earnings compound annual growth rate over FY23-25E has kept the sentiment buoyant.
Our universe posted an earnings CAGR of 26% to reach Rs 8.3 trillion over FY20- 23; whereas Nifty 50 posted an earnings CAGR of 22% to reach Rs 6.3 trillion during the same period. The earnings momentum is likely to remain strong going ahead with our/Nifty 50 earnings projected to clock 19%/17% CAGR over FY23-25.
Flows: After reporting cumulative outflows between October 2021 and February 2023, FII flows bounced back strongly in the last four months, with cumulative inflows of $14 billion over March-June 2023 while domestic institutional investor flows continued to remain positive at $4 billion during the same period. The recent recovery in FII flows has pushed the index to an all-time high level. As of CY23 year-to-date, FII inflows stand at $9.7 billion whereas DIIs remain net buyers with inflows of $10.5 billion.
Nifty 50 has gained 13% from March 2023 lows and touched an all-time high in June 2023. We note that as of June 30, 2023, Nifty 50 was up 4% and 2% from its October 2021 and Dec-22 highs, respectively.
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Also Read: Paytm - Raising Gross Merchandise Value, Disbursement Projections By 4-21%: Motilal Oswal
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