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MOSL: INDIA STRATEGY-Insight into market-cap changes since Feb’20 peak; Consumer gains at the cost of Financials

INDIA STRATEGY: Insight into market-cap changes since Feb’20 peak

Analyzing market-cap changes: Deep diving into sectoral variances
** The Nifty and the broader markets have corrected significantly over the last two months (the Nifty is down ~25% from its peak of 12,201 in Feb), in tandem with global equity markets, due to headwinds from the COVID-19 outbreak across multiple countries.

** India's (BSE 500) market capitalization is down 23% from the peak of INR149.5t in Feb'20. Over the same period, the Nifty-50's market cap is down by 23% to INR70.6t, Nifty Mid-Cap 100's market-cap is down by 28% to INR12.4t, and Nifty Small-Cap 100 by 34% to INR3.4t.

** We also looked at market-cap changes in a sector v/s the peak market cap to highlight the divergence in performances in various sectors. Based on this metric, we noted NBFCs (-41%), Real Estate (-40%), Metals (-36%), Private Banks (-36%), Media (-36%), PSU Banks (-34%), and Automobiles (-31%) were the laggards.

** Healthcare (+5%) was the only sector to escape the fall and remain positive. Consumer (-4%) and Telecom (-10%) outperformed this metric with <=10% correction from the peak market caps [Exhibit 2].

Key observations on BSE-500 market-cap trends (also sector-wise):

** Among the BSE 500 constituents, of the total market-cap correction of INR34.7t (to INR114.8t currently from INR149.5t in Feb'20), four sectors - Private Banks (20%, lost INR6.9t), NBFCs (17%, INR6t), Technology (11%, INR3.7t), and Automobiles (8%, INR2.8t) - contributed more than half to the absolute change in the market-cap of BSE-500 companies.