Motilal Oswal Report: Nifty Flat, Midcap And Smallcap Fall

According to Motilal Oswal Mutual Fund’s Global Market snapshot report, Nifty 500 remained flat in January but closed the year with a +6.94% gain. Midcap and Smallcap were negative for the month, down by around 3.53% to 5.52%. The Nifty 50 declined by 3.10% over the last one month. The index declined 1.56% over three months, but grew 2.23% over six months, and 7.71% on a one-year basis. The Nifty Next 50 posted a monthly loss of 2.20%. The index recorded returns of -2.84% over three months, 1.11% over six months, and 7.47% over one year. The Nifty Midcap 150 declined 3.53% over the one-month period and over the last three months, six months, and one year, the index delivered returns of -2.52%, 0.61%, and 8.26%, respectively. The Nifty Smallcap 250 declined 5.52% over the month. The index saw a decline of 8.95% over three months, while returns stood at −8.05% over six months and −0.55% over the one-year period. The Nifty Microcap 250 declined 5.66% over the last one month and delivered returns of −10.58% over three months, −11.14% over six months, and −6.44% over one year. The Nifty 500 recorded a monthly decline of 3.32% and over the last three months, six months, and one year, the index delivered returns of -2.66%, 0.72%, and 6.94%, respectively.

Nifty 50 was down 3.1%, while Midcap and Smallcap fell 3.5% and 5.5%, respectively, reflecting pressure in the broader market. 

Among sectors, Metals and Defence recorded gains of ~6%. FMCG, Realty and Consumer Durables saw declines in the range of 6% -11% over the month. Metals over the past year has given returns of more than 40%, Defence 27.9% and banks 20.21%. Auto also delivered 16.98% returns over the past year as well. The Realty sector has however seen a consistent decline over the past year of 15.02%. 

Value continued its positive streak with a 2.4% gain in the month of January and has given a positive run of 25% over the past year, while Momentum, Low Vol and Quality ended lower in January however they have been positive over the year. 

Commodities was the only positive contributor, while all other sectors contributed negatively and dragged the Nifty 500 lower.

Global Market Update

US equities ended higher in January. Nasdaq 100 and Dow Jones gained around 1.2%and1.7%. 

S&P 500rose 1.4%. Communication Services and Industrials contributed positively to index gains, while Financials and IT dragged the index lower. 

 In emerging markets, Korea and Brazil rose sharply by 28.1% and 16.7%. In developed markets, Japan and the UK gained 6.6%and 5.1%. 

Silver emerged as the best performer delivering the highest returns of 43.34% over the past month and remarkable 226.50% on a yearly basis. Gold, on the other hand, delivered returns of 14.06% in January and 77.16% over the past year. Meanwhile, the US dollar appreciated by 2.35% over the past month and 6.20% over the past year.

Quick Take

• India: CPI inflation stayed low but edged up to 1.33% in Jan. The 10-year G-sec yield moved up to 6.70% indicating a mild uptick in market rates even as policy rates remained unchanged. 

• Domestic activity stayed resilient with Composite PMI at 59.5 and GST collections strengthening to ₹1.93 lakh. 

• United States: CPI inflation eased to 2.70% in Jan, with the Fed funds target at 3.75% and 10-year Treasury yields around 4.26%