Bank Versus IT - Taking Stock Of The Relative Alpha: Motilal Oswal

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. . Motilal Oswal Report.Recap of CY23: Sharp divergence in the beginning, moderates by mid-yearCY22 ended with a sharp outperformance of banks over IT and the divergence stood at 47% between Nifty Bank and Nifty IT indices.  However, since the beginning of CY23 (January-March 2023) banks started to underperform mainly due to the U.S. banking crisis, expectations of a moderation in net interest income growth and marginsfor Indian banks and weak foreign institutional investor flows. Conversely, IT began to recover over a weak base of CY22 and anticipation of global interest rates nearing the peak.During April-June 2023, however, the performance reversed again for both the sectors with banks reviving as the U.S. banking crisis receded, Q4 FY23 earnings exceeded expectations and there was a pause in monetary tightening by the Reserve Bank of India. On the contrary, weak earnings performance by IT companies erased all the gains in Nifty IT by April-23, resulting in the divergence between both these indices narrowing to ~2% by end of June-23 from the highs of ~14% in February-23..Earnings of Banks spike faster than that of ITNifty Bank/Nifty IT constituents recorded a profit after tax compound annual growth rate of 14%/11% over FY13-23 while the indices grew 13%/17% during the same period. Over FY20-23, earnings for Nifty Bank and Nifty IT reported a CAGR of 39% and 10%, while the indices grew 34% and 37% during the same period, respectively.In FY23, earnings for Nifty Bank constituents remained strong with ~38% YoY growth, whereas growth for IT constituents moderated to 7% YoY. The Nifty Bank and Nifty IT indices grew 21% and declined 26% in CY22, respectively..Click on the attachment to read the full report:.TCS Puts All External Staffing Contracts Under Review. There Is Still A Lot To Answer.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Bank Versus IT - Taking Stock Of The Relative Alpha: Motilal Oswal

Nifty Bank outperforms while Nifty IT underperforms between the three peaks of Nifty-50

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