Non-banking financial Corporations, housing finance companies (HFCs) and public sector undertakings (PSUs) were the major issuers of corporate bonds in financial year 2022-2023, showed data analysed by Reserve Bank of India’s Financial Stability report. 

NBFCs, in particular, have raised more funds through public issues than private placement.

Banks and corporates were the main subscribers with residents dominating the public issue space.

On equities,the report said, ‘the Indian equity market has remained among the stronger performers globally, despite volatile shifts in global liquidity flows and sentiments, monetary tightening and the recent geopolitical and banking sector turmoil.’

Of the 200 firms in the BSE 200 index, 182 have reported profit growth of 5 per cent (y-o-y) and 23 per cent (q-o-q), noted the report. 

 Sharp rebound in FII flows
There has been a sharp rebound among foreign institutional investors who have made net purchases of US$ 11.6 billion since March 2023 (till June 23, 2023), while domestic institutional investors continue to provide support as net buyers, said RBI.

Volatility in India lower when compared to other markets
RBI also said volatility in the Indian market has been lower than other emerging market as well as advanced economy stock markets. 

 

Moreover, based on both trailing and forward price-to earnings ratio (P/E), Indian equities are at higher valuations compared to their peers in other countries. As seen in the chart below, India is the second most expensive market, after Japan.

Both Indian indexes have recently far outperformed their European peers. Since late March, the United Kingdom’s FTSE 100 (UKX) has risen just 0.8%, and France’s CAC 40 (CAC40) 2.9%. The pan-European Stoxx Europe 600 index has climbed 2.9%. The S&P 500gained 10% over the same time period, staying 8.8% below its record high reached in 2022.

Data analysed by Refinitiv shows that total value of Indian equities has hit $3.5 trillion, more than the value of Europe’s two biggest stock markets, in the UK and France.

“India has emerged as one of the sweet spots as far as investment by FPIs is concerned. They are consistent buyers and have supported the market. At the same time, regular incremental flow from SIP, provident fund & pension fund is also huge. SIP is growing consistently and is currently above Rs 14,000 crore per month. Domestic Institutions and mutual funds are becoming bigger and bigger,” said Mukesh Kochar, National Head – Wealth at AUM Capital Market.