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Motilal Oswal Report
The Nifty ended its five-month winning streak in August 2023. After scaling new highs in July 2023, the benchmark saw some profit booking and consolidation in Aug-23. The index oscillated 572 points before closing 500 points (or 2.5% month-on-month) lower at 19,254. The Nifty is up 6.3% in CY23-year-to-date.
Midcaps/smallcaps outperformed largecaps by 6.2%/7.1% in Aug-23. Similarly, midcaps/smallcaps have outperformed largecaps and have risen 24%/26% versus 6% rise for the Nifty in CY23 year-to-date.
Domestic institutional investors recorded notable inflows of $3 billion in Aug-23 after remaining muted for the last four months. Net inflows stood at $13.2 billion in CY23YTD. Foreign institutional investors remained net buyers for the sixth straight month at $1.7 billion in Aug-23; year-to-date inflows stood at $17 billion.
Corporate earnings for Q1 FY24 came in strong and could support the underlying overall optimistic narrative of India. Aggregate earnings of our universe were in line with our estimates and rose 52% YoY (versus estimate of +49% YoY). Nifty posted a beat with Ebitda/profit after tax growth of 22%/32% YoY versus our expectation of 18%/25%. Once again, the earnings growth was propelled by domestic cyclicals, such as banking financial services and insurance and auto.
Top ideas:
Largecaps – ICICI Bank Bank Ltd., ITC Ltd., Bajaj Finance Ltd., Larsen and Toubro Ltd., HCLTech Ltd., Titan Company Ltd., Sun Pharmaceutical Industries Ltd., Avenue Supermarts Ltd., Mahindra and Mahindra Ltd., and Zomato Ltd.
Midcaps and Smallcaps – The Indian Hotels Company Ltd., Ashok Leyland Ltd., Godrej Properties Ltd., APL Apollo Tubes Ltd., Mahindra and Mahindra Financial Services Ltd., Metro Brands Ltd., Kajaria Ceramics Ltd., CreditAccess Grameen Ltd., Angle One Ltd., and Lemon Tree Hotel Ltd.
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