How ICC Men's T20 World Cup resonates with India's capital markets

Since the onset of the pandemic, there has been a notable surge in retail investors' participation in India's equity markets.

This influx has transformed the landscape, with retail and domestic institutional investors (DIIs) now accounting for 62.9% of the market's free float, up from 55.1% a decade ago.

The total Demat accounts have skyrocketed to 160 million as of June 2024, up from 36 million in March 2020, indicative of the growing retail investor base.

The influx of retail investments has coincided with a robust performance in India Inc.'s earnings. Notably, Nifty-50 profits have compounded at 23% over FY20-24, underpinning the market's growth.

Moreover, the mutual fund equity assets under management (AUM) have surged from Rs 1.9 lakh crore in March 2014 to Rs 27.7 lakh crore as of May 2024, reflecting increased investor confidence and participation.

In terms of earnings, the outlook remains optimistic. Despite global challenges, domestic cyclical such as BFSI and Auto sectors are anticipated to drive growth, while contributions from metals and healthcare would rise.

Earnings from BFSI are projected to grow with banks and non-banking financial companies (NBFCs) leading the charge. Similarly, the automotive sector is expected to report solid earnings growth, albeit slightly moderated compared to previous quarters.

For Nifty, we expect sales and EBITDA to improve 6% and 4% YoY, respectively. Ex-OMC’s, EBITDA of the Nifty is likely to grow 8% YoY.

Sector-wise, the healthcare sector is poised for robust growth with a projected 21% YoY earnings increase, showcasing resilience amidst ongoing global health challenges.

Conversely, the metals sector is set to rebound with a 12% YoY earnings growth from a weak base in Q1FY24. Banks and NBFC Lending would mainly lead BFSI’s earnings, with 14% and 17% YoY growth, respectively.

The earnings growth of Private and PSU Banks, at 16% and 11% YoY, while healthy, is the lowest over 10 and 8 quarters, respectively. The Auto sector’s earnings are likely to rise 18% YoY, the lowest in nine quarters.

However, sectors like capital goods and specialty chemicals present varied performances, influenced by sector-specific dynamics and market conditions.

India's capital markets have demonstrated resilience and growth, buoyed by increased retail investor participation and robust corporate earnings.

This holistic approach underscores the transformative impact of retail investors and policy frameworks, reinforcing India's position as a dynamic and resilient market for global investors.

Looking ahead, the continuity in policy under the Modi-led NDA government is expected to sustain economic momentum. Key sectors like infrastructure, capital expenditure (capex), and manufacturing are poised to benefit from strategic government initiatives.

The forthcoming Union Budget and the 100-day agenda are pivotal in outlining the government's priorities and policy frameworks, crucial for sustaining investor confidence and economic growth.

: Buy | LTP Rs 6,349 | Target Rs 7,070 | Upside 11%

The reduction in losses in Apollo Hospitals continued to drive superior EBITDA growth on YoY basis. APHS continues to implement efforts to improve sales growth momentum and enhance profitability in Healthco over the medium term.

APHS has chalked out a plan to a) add 1,500 beds in existing markets, b) improve GMV/profitabilisolutionsalthco, c) add 500 stores for off-line pharmacy, and d) add labs/collection centers for the diagnostic business, thereby providing a comprehensive healthcare solution.

: Buy | LTP Rs 692 | Target Rs 800 | Upside 15%

We expect HMCL to deliver a volume CAGR of 9% over FY24-26E, driven by 1) new launches in 125cc, scooters and premium segments, 2) a ramp-up in exports.

HMCL will also benefit from a gradual rural recovery, given strong brand equity in the economy and executive segments. Expect double-digit revenue growth for the industry in FY25. Consumer sentiments were positive in March-April 2024.

Despite fewer wedding dates in May-June 2024, overall sentiment remains positive across rural and urban areas.

(The author is Head – Retail Research, Motilal Oswal Financial Services)

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)