Motilal Oswal: Markets Rally For Third Straight Month; FII Inflows Highest In A Decade

Motilal Oswal Report

The Nifty ended 2.8% higher month on month at 11,388 in August 2020 with the index closing higher for the third straight month now.

Mid-caps and small-caps led the market, making the rally more broad-based. This was aided by huge foreign institutional investor (FII) inflows in August 2020 of $6.1 billion – the highest monthly inflows in 10 years.

Domestic institutional investors continued to sell with outflows of $1.5 billion.

However, the Nifty is still down 6.4% year-to-date CY20. The Nifty Midcap100 price to earnings ratio now trades at 7% premium to the Nifty at 21.9 times (versus 11.5 times in March 2020), however it is still at a discount at price to book.

We hosted our 16th Annual Global Investor Conference over the last two weeks comprising 20 CEO Track Sessions, followed by 140 Companies and presenting one-on-one group interactions with 500 plus investors.

Key takeaways from the conference are:

1. Demand is gearing toward normalcy faster than we expected,
2. Supply pressures are easing and normalcy is getting restored. Cost reduction and capex deferment exist as tools across sectors to manage the bottom line in these unprecedented times,
3. Rural India is doing phenomenally well.

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