In December, MSCI India’s performance ranking slipped to 19th in MSCI EM. In 2016, MSCI India’s performance ranking stood at 16th among emerging markets.
In December, MSCI India’s performance ranking slipped to 19th in MSCI EM. In 2016, MSCI India’s performance ranking stood at 16th among emerging markets. BSE Sensex, for the second consecutive month, outperformed the BSE mid-cap and small-cap indices, by 3.6% and 2.2%, respectively. In 2016, the mid-cap index has outperformed the large-cap index by 6%, while the small cap index underperformed large cap index marginally by 0.2%. For the second month in a row, the MSCI India Value indices outperformed the Standard and Growth index, by 0.9% and 1.9%, respectively. In 2016, MSCI India Value indices outperformed Standard and Growth index 7 out of 12 months.
Sector performance: Energy was the best-performing sector, while Healthcare was the worst. Relative to EM, Technology was the best-performing and Telecoms the worst performing sector. During the month, sector rotation depth was down but breadth remained flat. In the year 2016, Materials and Telecoms were the best and worst-performing sectors.
Institutional flows: FPIs sold in the cash, futures and debt markets during the month. FPIs sold in the cash market for second consecutive month at $2.15 bn. Debt markets saw third-highest-selling in a month at $2.8 bn by FPIs. In the futures market, FPIs turned net sellers at $73m. DMFs were buyers for the 5th straight month at $920m. Domestic insurance companies bought for second consecutive month at ~$ 57m. Total Institutional flows saw outflows at $173m for the first time since Aug 2015 and highest ever outflows since Nov 2013. In 2016, FPIs have bought equities worth ~$3 bn and sold debt worth $6.4 bn, while domestic institutional investors have bought stock worth $5.1 bn.
Domestic mutual fund flows: Equity flows in DMFs remained positive for eight months running and reported strong inflows at R110.9 bn in November; similarly fixed income funds reported inflows of R224 billion. Total AUM stood at $244 billion. Equity AUM stood at $73.9 billion.
Corporate Activity: 3M trailing equity issuances were down 3%, while they were up 3% on a 12M trailing basis. 3M trailing debt issuance was up 10%.
Equity Market Activity: On a MoM basis, cash turnover, volumes and derivatives were down 27.3%, 21.7% and 14.8%, respectively. On a y-o-y basis, cash turnover and cash volumes were down 1.9% and 24.6%, respectively, while derivatives were up 67.9%, respectively.
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Market Indicators: During the month, Implied volatility was up 20% m-o-m,and VIX was down 8.2%. The put-call ratio was down 7% m-o-m, and the average 30D A/D line was marginally up by 0.9% m-o-m. Now 59% of the stocks are trading above their 200DMA.
Valuations and Earnings Estimate Revisions: Absolute P/E stood at 20.2 and the P/B, at its 19-month low, stood at 1.38x. The 12M Fwd P/E fell to 15.9x vs, 17.7x versus 3M ago. At the end of 2016,valuations were considerably lower from levels at the beginning of the year. Absolute P/E declined from 22.7x to 20.2x, while relative PE declined from 1.70x to 1.38x. The 3MMA of one-year revision breadth remained in the negative zone.
Currency: In December, the rupee appreciated 0.7% vs. the dollar and 1.7 vs. the euro. In 2016, the rupee depreciated 2.6% vs. the dollar and appreciated 0.6% vs. the euro. The rupee appreciated 2.2% vs. the JPY.
Bond Market: The 91-day yield was up 24 bp, while 10-year treasuries were up 27 bp. Since the monetary policy surprise by RBI of keeping rates on hold, the 91 day yield inched up 22 bps and the 10-year yield rose 31 bps. In 2016, the 10-year yield is down 125 bp and 91-day yield is down 95 bp.
Commodities: In December, prices in dollar for oil and corn were up 11.1% and 1%, respectively. Gold prices (dollar) were down 1.8% and CRB was flat during the month. In 2016, prices for oil were up 55%.