EUR 350.00 For Business Accounts Only

MOSL: India Strategy-A peek into market-cap changes since peak; Share of top-15 at decadal high

India Strategy: A peek into market-cap changes since peak; Share of top-15 at decadal high

 

Analyzing market-cap changes – taking a deep dive in sectoral variances

• The Nifty and the broader markets have corrected meaningfully from the recent highs, led by deepening economic slowdown, weak corporate earnings growth and certain policy decisions in the budget on taxation. India’s (BSE-500) market capitalization is down 11% from its peak of INR148t in Aug’18. Over the same period, the market cap of the Nifty-50 is down by 6% to INR80.1t, NSE mid-cap 100 by 17% to INR14.3t and NSE small-cap by 15% to INR4.4t. There is a rush for ‘flight to safety’ since Dec’17, with investors taking refuge in quality large-cap names amidst heightening volatility.
• ‘The bigger the better’ appears to be the common conviction if we look at the timelines when different indices reached their peak market-caps. Market-cap of small-caps peaked in Dec’17, mid-caps in Jan’18 and the Nifty in May’19. Since the peak of Aug’18, sectors that are worst affected in the downfall are Media (m-cap down by 37%), Metals (-37%), Autos (-36%), Healthcare (-19%) and Utilities (-18%). Notably, Real Estate (+10%), Private Banks (+1%) are the only sectors gaining market-cap since Aug’18.

 We also looked at market-cap change of a sector versus the peak market-cap achieved by that sector to highlight the divergence of performance of different sectors. On this metric, we note that Media (-47%), Metals (-43%), Autos (-40%), Mid-caps (-35%), Telecom (-28%) and Small-caps (-24%) were the laggards. Technology (-6%) and Real Estate (-6%) have outperformed on this metric with <=6% correction from their respective peak market-caps.