Charts:182 of 200 firms in BSE 200 index see profit rise by 5% on year

FPI flows are a major contributor to volatility spillovers in various segments of Indian financial market

Non-banking financial Corporations, housing finance companies (HFCs) and public sector undertakings (PSUs) were the major issuers of corporate bonds in financial year 2022-2023, showed data analysed by Reserve Bank of India's Financial Stability report. 

NBFCs, in particular, have raised more funds through public issues than private placement.

Banks and corporates were the main subscribers with residents dominating the public issue space.

On equities,the report said, ‘the Indian equity market has remained among the stronger performers globally, despite volatile shifts in global liquidity flows and sentiments, monetary tightening and the recent geopolitical and banking sector turmoil.’

Of the 200 firms in the BSE 200 index, 182 have reported profit growth of 5 per cent (y-o-y) and 23 per cent (q-o-q), noted the report. 

 

 Sharp rebound in FII flows
There has been a sharp rebound among foreign institutional investors who have made net purchases of US$ 11.6 billion since March 2023 (till June 23, 2023), while domestic institutional investors continue to provide support as net buyers, said RBI.

Volatility in India lower when compared to other markets
RBI also said volatility in the Indian market has been lower than other emerging market as well as advanced economy stock markets. 

 
Moreover, based on both trailing and forward price-to earnings ratio (P/E), Indian equities are at higher valuations compared to their peers in other countries. As seen in the chart below, India is the second most expensive market, after Japan.

Both Indian indexes have recently far outperformed their European peers. Since late March, the United Kingdom’s FTSE 100 (UKX) has risen just 0.8%, and France’s CAC 40 (CAC40) 2.9%. The pan-European Stoxx Europe 600 index has climbed 2.9%. The S&P 500gained 10% over the same time period, staying 8.8% below its record high reached in 2022.


Data analysed by Refinitiv shows that total value of Indian equities has hit $3.5 trillion, more than the value of Europe’s two biggest stock markets, in the UK and France.


"India has emerged as one of the sweet spots as far as investment by FPIs is concerned. They are consistent buyers and have supported the market. At the same time, regular incremental flow from SIP, provident fund & pension fund is also huge. SIP is growing consistently and is currently above Rs 14,000 crore per month. Domestic Institutions and mutual funds are becoming bigger and bigger," said Mukesh Kochar, National Head - Wealth at AUM Capital Market.

Kochar believes FII flows will continue due to India's advantage compared to its peer like China, Korea, or Taiwan. 

On Wednesday, domestic equities saw a dream run, with the Nifty and Sensex touching lifetime highs thanks to robust institutional flows and upbeat global sentiment.  FII bought shares worth Rs 12,350 crore, whereas DII sold shares worth Rs 1,021.01 crore on June 28, provisional data from the National Stock Exchange  

"Currently, the sentiment in the market has shifted favorably towards the bulls, indicating an optimistic outlook. For long-term investors, this presents an opportune moment to construct their portfolios with high-quality stocks. By carefully selecting such stocks, investors can position themselves to capitalize on the prevailing positive market sentiment and potentially achieve fruitful returns in the future," said Ameya Ranadive, Equity Research Analyst at Choice Broking.

Santosh Meena, Head of Research, Swastika Investmart Ltd believes that even though the current market sentiment indicates a sustained structural bull run, the levels around 19000–19191 could potentially serve as a resistance area, which might trigger profit booking from higher levels. Conversely, on the downside, the immediate support level can be identified at 18700, while 18450 is expected to provide a substantial base for the market.