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MOSL: INDIA STRATEGY-The Decade That Was; Relatively modest returns, but mega changes on multiple fronts

India Strategy: The Decade That Was; Relatively modest returns, but mega changes on multiple fronts

 

• As the popular saying goes, "we overestimate the change in the short term and underestimate it in the long term." A decade is a fairly long time in markets to reminisce the 'change' from many angles.
• Accordingly, we take a deep dive to understand how the markets have changed over the past decade and also look at returns, performers, earnings, valuations, flows, fund raising, market cap changes and many more nuances.

Market returns modest in this decade but mirror equally modest earnings growth…

India has delivered the second best returns (after the US) in the pecking order of world markets. In dollar terms, however, Japan/Taiwan markets’ performance was better than India’s given the underlying INR depreciation versus the USD. Over CY09-19, the Nifty has delivered an 8.9% return CAGR, mirroring the Nifty EPS CAGR of 8.2% over that period. If we divide the decade in two halves, the earnings trend was slightly better in the first half with Nifty EPS CAGR of 11%, which then moderated to 6% in the second half. The Nifty Midcap-100 delivered similar returns, while the Nifty Smallcap underperformed with just 5% CAGR.