After roller coaster journey NIFTY surpasses all time high

After a roller-coaster ride of 18 months, Nifty-50 finally surpassed its all-time high and touched the 19,000 mark in June 23.

Nifty's journey from 18,000 to 19,000 took 425 trading days (from October'21-June'23) vs. 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'22 and March'23 lows, mainly fueled by all-time high DII inflows of USD47b during the same 18-month period, recovery in FII flows post March'23 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'21 and February'23, FII flows bounced back strongly in the last four months, with cumulative inflows of USD14b over March-June'23 while DII flows continued to remain positive at USD4b 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 USD9.7b whereas DIIs remain net buyers with inflows of USD10.5b.

Nifty-50 has gained 13 per cent from March'23 lows and touched an all-time high in June'23. As of 30th June'23, Nifty-50 was up 4 per cent and 2 per cent from its October'21 and December'22 highs, respectively.

Now, as the peak of rate-hike cycle seems behind, mid- and small-caps are back in favour. This has been clearly evident in the recent market rally of December'22-June'23, when both mid- and small-cap outperformed Nifty-50 by 9 per cent and 6 per cent , respectively, the report said.

Notably, Nifty EPS grew 19 per cent during FY20-23 to Rs 807 as against market returns of 14 per cent (over January'20-June'23). Thus, valuations are far more reasonable today than that in October'21 highs, the report said.

While Nifty-50 is at a new high and is creating a lot of buzz, the fact remains that on a two-year basis, it stands nearly flat (just up 4 per cent from October'21 high); whereas its aggregate FY22/FY23 earnings are up 38 per cent /10 per cent .