Average daily cash volumes (ADCV) rose 28% month-on-month to Rs 636 billion in August, as benchmark indices rose 3.4%. Monthly institutional cash trading volumes rose 12% m-o-m to Rs 5.9 trillion, according to a report by Motilal Oswal Financial Services (MOFSL).
Experts attribute the jump in volumes to a number of block deals between institutional investors and the recovery in small and mid-cap stocks.
Indian equities rose 3% in dollar terms in August, beating most other markets. FPIs recorded inflows of $6.8 billion in August, the highest since December 2020. DIIs turned sellers at $0.9 billion during the month after 17 consecutive months of buying.
Indian equities recovered on hopes that the US Federal Reserve may not raise interest rates at the pace at which it was earlier expected to. The rally helped fuel secondary offerings of $2 billion, with PE giants from Blackstone to KKR selling down their holdings or heading for the exit, according to reports.
ADCV, however, is still 28% lower than its October 2021 high, according to MOSFL.
Four-fifths of BSE-200 constituents ended higher than the benchmark in August, with 45 companies gaining over 10%. Around half of BSE-200 constituents are trading higher YTD, with several Adani group companies leading the gainers’ pack. Around 32% of BSE-200 constituents are trading above their October 2021 highs.
India’s market capitalisation-to-GDP ratio now stands at 107% (of FY23E GDP), above its long-term average of 81%, according to MOFSL.
The weightage of the auto sector in Nifty 50 has climbed to 6% in August, the highest since December 2019. The weightage of private banks is at 23.4%, about 50 bps higher than the previous month. The weightage of the technology sector slid to 14.2% in August, down 90 bps over the previous month and 490 bps lower in the YTD.
The 12-month trailing P/E for the Nifty stood at 22.8x, 14% higher than its long period average. At 3.4x, the 12-month trailing P/B stood 16% above its historical average of 2.9x.