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MOSL: Morning India (14/August/19): 1. India Strategy (A peek into market-cap changes since peak); 2. Fund Folio; 3. EcoScope; 4. Financials – NBFC; 5. ONGC; 6. Coal India; 7. Sun Pharma; 8. BPCL; 9. Bosch; 10.

MOrning India (14/August/19): 1. India Strategy (A peek into market-cap changes since peak); 2. Fund Folio; 3. EcoScope; 4. Financials – NBFC; 5. ONGC; 6. Coal India; 7. Sun Pharma; 8. BPCL; 9. Bosch; 10. United Breweries

 

Today’s top research theme

India Strategy: A peek into market-cap changes since peak

• 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.
• '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%) and Autos (-36%). Notably, Real Estate (+10%), Private Banks (+1%) are the only sectors gaining market-cap since Aug'18.
• Bulk of the correction (i.e. ~80%) in the Nifty's market capitalization from INR86t to INR80t since Aug'18 has been driven by Maruti (17%), ITC (15%), ONGC (12%), Yes Bank (10%), M&M (9%), Coal India (9%) and Sun Pharma (9%), while private financials like HDFC, ICICI Bank, HDFC Bank, Kotak Bank and defensives like TCS and Bharti Airtel have contributed positively.

Piping hot news

Retail inflation at sub-4% for 12th month in a row

Barring meat, fish and pulses, the prices of various commodities still appear to be subdued as rate of retail inflation is still below four per cent for 12 months in a row. The retail inflation rate based on consumer price index (CPI) dropped in July to 3.15 per cent as against 4.17 per cent in July 2018. The drop was less when compared with the sequential month June, when it stood at 3.18 per cent.