Mid-& small-caps back in focus
Even during Dec 2022-June 2023 rally, both segments outperformed NSE Nifty by 9% and 6%, respectively
Improving earnings outlook prefers mid-cap and small-cap equities compared to large-caps
New Delhi After a roller-coaster ride of 18 months, Nifty-50 finally surpassed its all-time high and touched the 19,000 mark on June 23. Nifty’s journey from 18,000 to 19,000 mark took 425 trading days (from Oct 2021-June 2023) as against only 30 days when it covered the journey from 17,000 to 18,000, Motilal Oswal Financial Services said in a report.
Despite these obstacles, however, Nifty-50 managed to recover from its June 2022 and March 2023 lows, mainly fueled by all-time high DII inflows of $47 billion during the same 18-month period, recovery in FII flows post March 2023 and healthy corporate earnings delivery in 4QFY23. The recent rally in Nifty-50 has been led by a strong combination of healthy macro and micro, complemented by sharp recovery in FII flows.
After reporting cumulative outflows between October 2021 and February 2023, FII flows bounced back strongly in the last four months, with cumulative inflows of $14 billion over March-June 2023, while DII flows continued to remain positive at $4 billion during the same period, the report said. The recent recovery in FII flows has pushed the index to an all-time high level. As of CY23YTD, FII inflows stand at $9.7 billion, whereas DIIs remain net buyers with inflows of $10.5 billion.
Nifty-50 has gained 13 per cent from March 2023 lows and touched an all-time high in June 2023. As of June 30, 2023, Nifty-50 was up 4 per cent and 2 per cent from its October 2021 and December 2022 highs, respectively. Now, as the peak of rate-hike cycle seems behind, mid- and small-caps are back in favour.
