A Decade of Triumphs and Trials-20210111-MOSL-SU-PG050

2010-20
A Decade of
Triumphs and Trials
Gautam Duggad
Gautam.Duggad@motilaloswal.com
Deven Mistry
Deven@motilaloswal.com
June 2020
JANUARY 2021
2010-20: A Decade of
Triumphs and Trials
 As we step into CY21, this edition of our Strategy report looks at the decade gone by from various lenses –
markets, economy, stocks, politics and several key events which unfolded and defined the 2020’s.
 As the popular saying goes, “One overestimates the change that can occur in the short term and
underestimates the change that will occur in the long term.” A decade is a fairly long time in the market to
reminisce the ‘change’ from many angles.
 While the stock market provided modest CAGR returns, the decade has seen many triumphs and tribulations.
After almost three decades of coalition governments, the country saw its first decisive mandate for a single
party government in 2014. This was repeated in 2019 with an even greater decisive mandate, a first in five
decades that a single party majority government was re-elected to power. This brought several big ticket and
game-changing reforms to the fore over the last six years.
 Cliché as it may sound, global and domestic equity markets witnessed elevated disruption and consequent
volatility in the last decade. This ensured sharp divergences in returns, not just across sectors, but even
within the sector. The decade witnessed emergence of several Technology companies overtake companies
that have been in existence for multiple decades. Innovation, startups, disruption became the buzzwords as
incumbent legacy business models were disrupted by new age entrepreneurs. There have been several macro
crises as well along the way (taper tantrum, currency meltdown, crude spike, COVID-19). On the macro front,
if the 2000-10’s decade was known for investment, capital formation, and capex cycle, the 2010-20 decade
would be known for deleveraging and the absence of private capex.
 Corporate earnings – the fuel for the market’s upwards journey – were muted in the decade gone by. Hope
for an earnings revival, as ever, remains intact as India emerges out of the COVID-19 crisis.
 The last decade also saw near historical low interest rates, both in India and globally, which would have a
defining impact on consumption, growth outlook, valuation of asset classes, and multiple other aspects.
A Decade of Triumphs and Trials | January 2021 2 June 2020

Narendra Modi
wins historic
India wins the elections
ICC World Cup
2014
ISRO made history when
India became the first
2014 country in the world to reach
2011 Mars in its maiden attempt
Reliance Jio’s
commercial launch
Important events
2016 during the decade 2015
The frenzy over a
gone by Federal Reserve rate

hike had an alarming
effect on markets
2010-
2016 2020
Oil prices touched

Demonetization and 2016 USD100/bbl and turned
digitalization of the negative both in the
Indian economy decade gone by
Military aggression – India
avenged the Uri attack

GST: Historic rollout of the
single tax regime
2017
2018 US-China trade war
2020
Mr Aditya Puri, MD of HDFC Bank,

retired after a very successful 25
years of leadership with the bank
Important events
during the decade 2018
gone by ILFS crisis roiled the

debt market
2020
2019
A year when markets saw
both Bull and Bear cycles
2020 Pulwama attack and

Balakot air strike
A pandemic year

Looking back: A decade in the market
Nifty delivers eight years of positive return
Sources of exhibits in this report include Bloomberg, SEBI, NSE, Capitaline, companies, RBI, CEIC and MOFSL’s database

Global equities: The US was the best performing market in the decade gone by
Performance of world equity indices – in local currency (%) – India Performance of world equity indices – in USD (%) – Taiwan and South Korea
delivered the third highest return among key global markets overtook India in USD terms
CY10-20 (%, CAGR) CY10-20 (%, CAGR)
US - S&P 500 12 US - S&P 500 12
Japan 10 Japan 8
India - Nifty 9 Taiwan 5
Brazil 6 South Korea 4
Taiwan 5 India - Nifty 3
South Korea 3 MSCI EM 1
Russia MICEX 3 UK 0
MSCI EM 1 China (HSCEI) -2
UK 1 Russia MICEX -6
China (HSCEI) -2 Brazil -6

India’s global rank remains stable
Global ranking on a market capitalization basis – India v/s others
M-cap rank M-cap CY20 CAGR (%) Change
Country CY10 CY15 CY20 (USD t) Change (%) 5 year 10 year in rank
United States 1 1 1 42.6 24 13 11 0
China 5 2 2 10.9 49 9 13 3
Japan 2 3 3 6.8 8 6 5 -1
Hong Kong 4 4 4 6.5 18 10 7 0
United Kingdom 3 5 5 3.3 -6 -1 0 -2
France 7 6 6 2.9 8 9 5 1
Canada 6 8 7 2.6 11 10 2 -1
India 8 10 8 2.5 17 11 4 0
Germany 9 7 9 2.5 10 6 5 0
South Korea 13 11 10 2.1 46 12 7 3
Switzerland 12 9 11 2.0 8 6 5 1
Taiwan 15 13 12 1.8 33 16 7 3
Australia 10 12 13 1.6 18 9 1 -3
Sweden 18 14 14 1.1 32 11 7 4
Netherlands 25 20 15 1.0 33 20 12 10

World m-cap crosses USD100t
Global m-cap has doubled in the decade gone by
World m-cap (USD t)
103
87
81
66 70
62 65 64
52 52
46
CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20
India’s share in global m-cap at its historical average
India's Contribution to World Mcap (%)

3.5
3.1
3.0
Average: 2.4%
2.5 2.4
2.0
1.6
1.5
Nov-11
Nov-14
Sep-12
Feb-13
Jul-20
Dec-10
Dec-17
Dec-20
Jun-11
Jun-14
Jun-17
Jan-14
Mar-16
Oct-15
Jan-17
Mar-19
Oct-18
Jan-20
May-18
Apr-12
Apr-15
Aug-13
Aug-16
Aug-19
Indian equities outperform other asset classes
CY10-20 returns for various asset classes (%, CAGR)
10.2
9.3
7.6 7.6
5.8
2.9
India Treasury Bill Yield Bank FD 10 Year G Sec % Gold $ Gold INR Equities (Nifty TR)
12 Month
Note: Yield, bank FD and G-Sec returns are average for the decade
Nifty delivered eight years of positive return in the decade gone by; CY11 and CY15 were exceptions
18 -25 28 7 31 -4 3 29 3 12 15
23 -37 24 -5 29 -8 0 37 -5 10 12
Trend in Nifty
CAGR in INR terms: 8.6% | CAGR in USD terms:
3.4%
10,531
10,863
12,168
13,982
6,135
4,624
5,905
6,304
8,283
7,946
8,186
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
CY18
CY19
CY20
Annual return in INR (%) terms Annual return in USD (%) terms

Midcaps outperform large-caps; small-caps lag behind the most
Midcaps outperform large-caps during the decade
Nifty-50 rebased Nifty Midcap-100 rebased Nifty Smallcap-100 rebased

250
235
200
228
173
150
100
50
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
After underperforming in the last two years, mid-caps bounced back in CY20
Nifty-50 YoY (%) Nifty Midcap-100 YoY (%)

56
47
39
28 31 29
19 22
18 15
12
7 6 7
3 3
-5 -4 -4
-15
-25
-31

IT, Consumer performed well; Cyclicals lost the most
Sectoral performance over the decade (%, CAGR)
13 CY10-CY20 (%, CAGR)

12 12
10 10 9 9 7
6
3 2
0 -1 -4 -4
Technology
Bank
Nifty Midcap 100
Capital Goods
Nifty-50
Telecom
Realty
Auto
Finance
Power
Nifty Smallcap 100
Healthcare
Oil & Gas

Consumer
Metal
Years of negative return over the decade; Consumer delivered only one-year of negative return in the decade under review
Years of negative return over CY11-20

6 6 6
5
4 4 4 4 4 4 4
3
2 2
Bank 1
Midcap
Tech
Realty
Telecom
Nifty-50
Auto
Power
Finance
Smallcap
Goods
Healthcare
Oil & Gas
Consumer
Metal
Cap.
100
100

54
Bajaj Finance
35
Eicher Motors
35
Bajaj Finserv
33
Britannia Inds.
28
Shree Cement
28
Divi's Lab.
25
Asian Paints
24
Kotak Mah. Bank
24
Titan Co
WINNERS
24
HCL Tech
23
HUL
A Decade of Triumphs and Trials | January 2021

Top and bottom 15 Nifty performers over CY11-20 (%, CAGR)
20
HDFC Bank
19
Tech Mah
18
Maruti Suzuki
17
TCS
12
9
Nifty-50
7
Power Grid
6
M&M
CY10-CY20 (%, CAGR)
ITC
5
Hero Moto
4
Bharti Airtel
4
L&T
1
IOC
Nifty: Top winners and laggards in the decade gone by
Tata Steel
0
LAGGARDS
SBI
0
Hindalco Inds
-2
GAIL
-3
Tata Motors
-5
NTPC
-8
ONGC
-8
Coal India
June 2020
53
Astral Poly Tech
in CY20
KSK Energy Ven.
-41
50
Ajanta Pharma
Educomp Sol.
-39
46
P I Industries
Reliance Comm.
-35
46
Relaxo Footwear
GTL
-34
44
Aarti Industries
Punj Lloyd
-32
Top 25 gainers in the past decade
43
Atul
Bottom 25 laggards in the past decade

Reliance Capital
-32
38
Balkrishna Inds
Reliance Power
-32
35
Berger Paints
Opto Circuits
-30
34
Unitech
Page Industries
-30
A Decade of Triumphs and Trials | January 2021

32
Videocon Inds. SRF
-30
32
Reliance Infra. Honeywell Auto
-29
32
MMTC Natco Pharma
-29
31
Info Edg.(India)
13
Aban Offshore
-28
28
Reliance Nav. Abbott India

-28
28
Rolta India Mindtree

-28
Top 25 gainers over CY11-20 (%, CAGR)
28
HDIL Pidilite Inds.

-28
Bottom 25 laggards over CY10-20 (%, CAGR)
28
JP Power Ven. Havells India

-24
27
Bajaj Hindusthan Supreme Inds.

-24
JP Associates
27
MRF
-23
GVK Power Infra.

26
Cholaman.Inv.&Fn
-23
IOB
25
-23
Torrent Pharma.
Tata Steel BSL

-22
25
Amara Raja Batt.

BSE 200 (ex-Nifty): Winners and laggards in the decade gone by
Central Bank
-21
25
Whirlpool India
Union Bank (I)

-21
24
Jubilant Food.
63 Moons Tech.
-21
24
Bata India
*Source: Bloomberg, Capitaline, MOFSL. Excludes Nifty companies. Bottom 25 laggards based on BSE 200 constituents as of Dec’10. Top 25 winners based on BSE 200 constituents
June 2020
Sectoral weights in the Nifty: Fortunes for BFSI reverse
Trend in Nifty sectoral weightage (%) – Private Financials gained massively in the last decade
Weightage in Nifty (%) Change in weightage
Sector Dec’10 Dec’15 Dec’20 10-year 5-year
Automobiles 7.5 9.9 5.4 -2.1 -4.5
Banks - Private 14.5 20.7 24.7 10.2 4.1
Banks - Public 4.9 3.3 1.8 -3.1 -1.5
Insurance 0.0 0.0 1.5 1.5 1.5
NBFC 6.6 7.0 10.8 4.2 3.8
Capital Goods 8.7 4.2 2.6 -6.1 -1.6
Cement 1.9 2.8 2.2 0.3 -0.7
Consumer 6.8 10.1 11.5 4.7 1.5
Healthcare 3.7 7.3 3.6 -0.1 -3.7
Metals 8.4 1.3 2.0 -6.4 0.7
Oil & Gas 14.7 9.1 12.5* -2.2 3.3
Technology 14.3 16.3 16.3 2.0 0.0
Telecom 2.9 2.2 2.0 -0.9 -0.2
Utilities 4.5 4.1 2.1 -2.4 -2.0
Others 0.6 1.7 1.0 0.4 -0.7
Nifty 100.0 100.0 100.0
*Oil and Gas comprises Reliance Industries with 10.7% weightage. Three-fourth of RIL’s value is dominated by Telecom and Retail

PSU share in Indian market at a two decade low
Indian market Cap (INR t) PSU Contribution (%)
33 33
189
31
30 CY10-20: Indian Market Cap
increased by 2.6x (10% CAGR)
28 28
27 27
26
24
22
CY00-CY20: 28.6x
(18% CAGR)
19
18
17
16 16
73 19
CY00-10: Indian Market 14
13 Cap increased by 11.1x 13
(27% CAGR)
10
7
5 6 13 17 25 36 72 31 61 53 69 70 98 100 106 152 145 156
CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20

Nifty v/s Nifty Midcap 100 – Gap in m-cap is still significant
Nifty’s m-cap expanded 2.8x in the last decade, up 44% since Dec’17
Nifty (INR t) 109.3

90.0
76.0 78.9
55.5 54.5 57.1

38.4 38.7 42.7
31.3
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
M-cap of Nifty Midcap 100 still below the Dec’17 levels
6% correction from the peak
Nifty Midcap 100 (INR t) 21.9
20.6
16.7 17.0 16.7 16.1
15.9
11.0
8.2 9.0
6.9
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Top 25 companies in terms of m-cap | RIL remains the king, BFSI gains, PSUs lose
12 out of top 25 companies have remained common in the last 10-year cycle
CY10 m-cap CY15 m-cap (INR CY20 m-cap

Company Company Company CAGR (%)
(INR b) b) (INR b)
Reliance Industries 3463 TCS 4806 Reliance Industries 13,053 14
ONGC 2766 Reliance Industries 3280 TCS 10,770 17
TCS 2280 HDFC Bank 2734 HDFC Bank 7,913 22
Coal India 1986 ITC 2633 Hind. Unilever 5,624 23
Infosys 1978 Infosys 2537 Infosys 5,349 10
State Bank of India 1785 Coal India 2076 HDFC 4,606 16
NTPC 1654 ONGC 2070 Kotak Mah. Bank 3,952 28
Bharti Airtel 1361 HDFC 1993 ICICI Bank 3,692 11
ITC 1345 Sun Pharma. Inds. 1973 Bajaj Finance 3,191 62
ICICI Bank 1318 Hind. Unilever 1866 Bharti Airtel 2,779 7
Larsen & Toubro 1203 State Bank of India 1742 Asian Paints 2,652 25
Wipro 1203 ICICI Bank 1520 ITC 2,572 7
MMTC 1170 Maruti Suzuki 1394 HCL Technologies 2,567 23
BHEL 1138 Wipro 1383 State Bank of India 2,452 3
NMDC 1101 Bharti Airtel 1359 Maruti Suzuki 2,311 19
HDFC Bank 1090 Kotak Mah. Bank 1317 Wipro 2,208 6
HDFC 1066 Tata Motors 1277 Axis Bank 1,899 13
IOCL 833 HCL Technologies 1206 Larsen & Toubro 1,808 4
Tata Motors 777 NTPC 1203 Avenue Super. 1,792 NA
SAIL 754 Larsen & Toubro 1188 Nestle India 1,773 17
Adani Enterp. 714 Axis Bank 1069 Adani Green 1,646 NA
Hind. Unilever 682 IOCL 1041 UltraTech Cem. 1,525 18
Jindal Steel 666 Asian Paints 848 Sun Pharma. Inds. 1,421 11
GAIL (India) 648 Lupin 828 Bajaj Finserv 1,417 36
Cairn India 632 Bharti Infra. 812 Titan Company 1,392 24
Top 25 33613 44155 90,364 10
India 73094 100622 188,771 10
Top 25 (%) 46 44 48
Number of PSUs 10 5 1

Stocks with over 1% contribution to the listed universe m-cap
Seven out of 17 stocks with over 1% contribution are from the BFSI space
% of listed m-cap
Company Sector CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20
Reliance Inds. Oil and Gas 4.7 4.3 3.9 4.1 2.9 3.3 3.3 3.8 4.9 6.2 6.9
TCS Technology 3.1 4.3 3.6 6.0 5.1 4.8 4.4 3.4 4.9 5.2 5.7
HDFC Bank Banks - Private 1.5 1.9 2.3 2.3 2.3 2.7 2.9 3.2 4.0 4.5 4.2
Hind. Unilever Consumer 0.9 1.7 1.6 1.8 1.7 1.9 1.7 2.0 2.7 2.7 3.0
Infosys Technology 2.7 3.0 1.9 2.8 2.3 2.5 2.2 1.5 2.0 2.0 2.8
HDFC NBFCs 1.5 1.8 1.8 1.8 1.8 2.0 1.9 1.8 2.3 2.7 2.4
Kotak Mah. Bank Banks - Private 0.5 0.6 0.7 0.8 1.0 1.3 1.2 1.3 1.7 2.1 2.1
ICICI Bank Banks - Private 1.8 1.5 1.9 1.8 2.1 1.5 1.4 1.3 1.6 2.2 2.0
Bajaj Fin. NBFCs 0.0 0.0 0.1 0.1 0.2 0.3 0.4 0.7 1.1 1.6 1.7
Bharti Airtel Telecom 1.9 2.4 1.7 1.9 1.4 1.4 1.2 1.4 0.9 1.5 1.5
Asian Paints Consumer 0.4 0.5 0.6 0.7 0.7 0.8 0.8 0.7 0.9 1.1 1.4
ITC Consumer 1.8 2.9 3.3 3.6 3.0 2.6 2.8 2.1 2.4 1.9 1.4
HCL Technologies Technology 0.4 0.5 0.6 1.3 1.1 1.2 1.1 0.8 0.9 1.0 1.4
State Bank of India Banks - Public 2.4 1.9 2.3 1.7 2.4 1.7 1.8 1.8 1.8 1.9 1.3
Maruti Suzuki Automobiles 0.6 0.5 0.6 0.8 1.0 1.4 1.5 1.9 1.6 1.4 1.2
Wipro Technology 1.6 1.8 1.4 2.0 1.4 1.4 1.1 0.9 1.0 0.9 1.2
Axis Bank Banks - Private 0.8 0.6 0.8 0.9 1.2 1.1 1.0 1.0 1.1 1.4 1.0
Total 26.7 30.2 29.4 34.2 31.7 31.9 30.7 29.6 35.7 40.2 41.1
Widening divergence: Contribution of Top 15 to the Top 100 m-cap at its peak
Contribution of Top 15 to the Top 100 m-cap (%)
53.1
52.1
50.7
50.6
49.2
48.1
47.8
47.4
46.5
45.6
44.5
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Billion dollar club: Contribution to Indian m-cap higher than CY17 peak
Indian 1.6 1.0 1.3 1.1 1.6 1.5 1.6 2.4 2.1 2.2 2.6
m-cap
(USD t)
Number of billion dollar companies % to Indian Mcap
329
300
282 276
224 228 91
212 214 91
187
164 88
150 88
86 86
85 85 85 85
83
Trend in companies with over USD10b and USD25b m-cap (number of companies)
>10 USDb >25 USDb

50 17
49 16
43 15
41 14
13
34 33 12
11
29 29 10
26
20 19 7 7
6
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
CY18
CY19
CY20
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
CY18
CY19
CY20

Institutional flows: FIIs took the lead
FII investments in the Indian equity market stand at USD209b with only four years of outflows
Cumulative flows: USD209b
CY93-00: USD11.9b CY01-10: USD90.2b CY11-20: USD107.1b
29.3
24.5
23.4
20.0
17.8
17.6
16.2
14.2
10.8
3.3
2.9
7.7
0.8
2.2
1.2
3.1
1.6
1.7
1.5
2.7
0.7
6.7
8.6
8.1
-4.6
-0.2
-0.5
-12.2
CY93
CY94
CY95
CY96
CY97
CY98
CY99
CY00
CY01
CY02
CY03
CY04
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
CY18
CY19
CY20
DIIs have invested USD51b till date, with MFs being the major contributor post CY15. The same tapered off in CY20
Cumulative flows: USD51.3b
CY01-10: USD27.8b CY11-20: USD23.7b

16.9
15.9
14.0
10.2
5.3
6.0
0.1
3.1
3.7
5.4
5.3
5.9
-4.9
-4.9
-0.2
-1.1
-0.6
-0.3
-4.7
-10.9
-13.0
CY00
CY01
CY02
CY03
CY04
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
CY18
CY19
CY20
Domestic MFs | Equity AUMs making new highs
AUM rises by 4.6x as against Nifty’s rise of 2.3x in the last 10 years
Equity Incl. ELSS & Index AUM (INR t) Nifty Index
13,982
AUM CAGR 16% 12,168
Nifty CAGR 9% 10,531 10,863 9.5
8,283 8,186 7.9 8.1
7,946 7.7
6,135 5,905 6,304
4,624
4.7
4.1
3.2
2.1 1.9
1.6 1.8
Total net inflows for the MF industry
Total Net Inflows (INR t) Equity % to total inflows
75 83
62
51
39 38
17 19
4
-25 -32
0.2 0.6 0.3 0.7 1.8 2.9 2.4 1.5 2.0 1.8
-0.9

Institutional ownership increases by 700bp over the last decade
Institutional ownership (FII and DII) in Indian equities has increased in the last decade, while promoter and public ownership has declined
Promoter (%) FIIs (%) DII (%) Public / Others (%)
16.7 16.6 16.8 16.1 15.8 16.2 17.0 16.5 16.1 14.4 14.6
10.1 10.6 10.5 10.4 10.4 11.5 11.9 12.5 13.5 14.2 14.2
17.5 17.2 19.1 21.5 22.3 21.0 20.3 19.9 21.5 20.4
20.3
55.7 55.6 53.5 52.0 51.5 51.3 50.9 51.1 50.1 49.9 50.7
Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec-18 Dec-19 Sep-20
FII Proportion of Free Float (%) DII Proportion of Free Float (%)
46.0 28.9
28.4
44.9
27.1
43.2
25.6
41.2 41.3 41.4
23.9 42.9
39.6
24.1 40.6 40.6
22.8 23.6
22.6
38.7
21.6 21.5
Dec 10
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Sep-20
Dec-18
Dec-19
Fund raising | Second best year after a blockbuster CY17
Fund mobilization in public markets (INR b)
Year IPOs FPOs IDRs OFS QIPs Total equity
CY10 373 316 24.9 237 951
CY11 61 81 35 176
CY12 70 221 52 343
CY13 16 70 221 84 391
CY14 15 5 47 321 388
CY15 139 355 189 683
CY16 270 125 48 443
CY17 760 207 598 1565
CY18 335 131 165 631
CY19 178 263 352 793
CY20 460 215 805 1480
Equity raising through IPOs and FPOs (INR b) Equity raising through QIPs (INR b) Equity raising through OFS (INR b)
IPOs FPOs No of companies QIPs No of companies OFS No of companies

0
169 35
355
166 56
94 805
316
71 63 68 263
46 42 23
25 37 49 0 215
19
34 30 221 221
760 207
40
0 598 165 125
0 26 25 13
460 17 14 9 9 13
13 8
373 11 35211 131
0 335 0 9 321
70 270 237
81 178 189
0
61 70 5 139 35 52 84 48 47
16 15
CY12
CY13
CY14
CY15
CY16
CY17
CY18
CY19
CY20
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
CY18
CY19
CY20
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
CY18
CY19
CY20

Market volumes grew by 33% CAGR over the last decade
Market volumes have seen a 33% CAGR increase over CY11-20
84 90 90 92 91 92 94 95 96 97 97
16 Total Daily Avg Volumes (INR B) Cash Volumes % to Total Volumes
CAGR of 33%
20,040
10 10
8 9
8
6
13,030
5
9,476
3 3
1,194
1,441
1,361
1,638
2,163
2,754
3,666
6,081
4
F&O volumes as percentage of total volumes
Ratio of FII to DII volumes has fallen
FII:DII volumes
2.6 2.6
2.5
2.3 2.2 2.2
2.0
Average of 2.1x 1.7

1.5 1.6 1.6

Retail participation touching new highs in recent times
Non Institution % to Cash Volume

80
71
65
65
53
Average: 46%
50
35
28
20
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Valuation trajectory; Nifty trades in a 13-25x P/E band
Market at record high, valuations above historical averages
Nifty Nifty P/E (x)

16,000 28.0
CY10-20: Nifty CAGR: 8.6% | Average P/E: 18.8x 25.1 13,982
13,000 24.0
22.3
21.4
10,000 20.0
7,000 16.0
4,000 13.3 12.0

Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
12-month forward Nifty P/B (x) 12-month forward Nifty RoE (%)
3.5 17.5
3.0 16.0
3.0
10-year average: 14.1

14.5 10-year average:
2.5 2.6x
14.0%
13.0
2.0
11.5
1.5 10.0
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
M-cap-to-GDP ratio – 2020 saw a decade high and low
M-cap-to-GDP ratio (%)
Estimated 5% decline in FY21

GFC: Peak of 149% in Dec’07 nominal GDP growth rate
Lowest since the

103
GFC 98
95
88
82 83 83
81 79 79
71
Average of 65% for the period 69
64 66
56
52 55
45
42
26
26 23
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
Earnings at a glance
Earnings and returns go hand in hand

Earnings and returns go hand in hand
Nifty EPS (INR) - Index earnings and index prices are two sides of the same coin
FY01-FY21 CAGR:
Nifty Index: 13%
Nifty EPS: 10%
FY11-21E CAGR:
Nifty Index: 9.1% 516
Nifty EPS: 5.1%
483
467
451
426
415
406
397
369
315 348
FY01-11 CAGR:
Nifty Index: 17.7%
Nifty EPS: 15.8% 281
251 247
236
184
169
131
73
92
78
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
Corporate profitability at a two decade low
Corporate Profit to GDP (%)
7.8
7.3
6.5
6.3 6.3
5.4 5.5
4.8 Average of 4.4%

4.7
4.3 4.3
3.7 3.6
3.2 3.1
3.0 2.9
2.1 2.2
1.9 1.8
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20E
Note: Corporate profit compiled from Capitaline for available listed + unlisted companies; FY20 earnings from few unlisted companies are yet to be added,
even though it may not change aggregates meaningfully

Earnings growth for the MOFSL universe has been modest over the decade
Sales (INR b) PAT (INR b)
26,339
33,829
37,997
42,084
42,697
39,763
44,135
49,932
59,660
59,513
55,020
2,674
3,105
3,218
3,501
3,622
3,749
4,259
4,497
4,868
4,606
5,283
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
EBIDTA margin excluding OMC and Finance companies (%) Net debt-to-equity (x)
0.46
20.9 0.42
0.39 0.40
20.3 0.37 0.36
Average: 0.36x 0.34 0.35 0.36
19.2 19.2 19.2
Average: 19% 19.1 0.27
18.3 18.3 18.3 18.2 18.2 0.22
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
Contribution of select defensives has increased
Private Financials,Consumer and Tech (PAT,INRb) % Share to MOFSL Univ. 2,319
2,080
1,870
45
1,519 1,585 44
1,415
1,293
1,143 38 38
941 36 36 35
766
608 33
29
23 25
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21E
Defensive Domestic Cyclicals Global Cyclicals
32 32 27 29
38 37 35 39 38
44 43
34 31 32 41 39
35 31 31 33
31 32
31 34 37 33 30 32 32
26 25 28 28
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
Stark divergence in intra-sector performance (FY11-21E)
Eicher Hero Moto HDFC Bank SBI Bajaj Finance Shriram Transport
34.4 22.8 21.8
61.9
22.0
9.8 34.3
7.0 3.6
3.6 7.9
3.0
PAT CAGR (%) Mcap CAGR (%) PAT CAGR (%) Mcap CAGR (%) PAT CAGR (%) Mcap CAGR (%)
HUL ITC Shree Cement ACC Divis Lab Sun Pharma

24.7 27.5
28.7 28.1
17.0
14.3
12.0 12.1
9.7
6.4
2.3 4.2
JSW Steel Tata Steel TCS Wipro Power Grid Corp. Coal India
16.5 16.3
16.9
14.2
13.8 7.7
1.2
6.8 6.5
2.2
-1.1 -9.1

Macro overview
The 21st Century Thus Far: Two decades, Two Different Stories

Summary of India’s economy in the first two decades of the 21st century
2000s decade 2010s decade
34.5
31.2
23.1
20.1
14.5 15.1
12.9
11.2
8.8
7.0 7.2 7.7
6.9 6.3 6.7
5.2
2.1
0.5
Real GDP^ Real Real HH investments^ Total debt^ HH savings* Total Fiscal deficit* CAD*
consumption^@ investments^$ investments*&
^ Average CAGR during the decades * Average % of GDP during the decades
@ Personal + Government $ Excluding ‘errors & omissions (E&O)’ & Including ‘E&O’; FY20 is our estimate
Total debt is our estimate compiled from all institutional sources for the non-financial sector Source: CSO, RBI, CEIC,
MoFSL

Per capita GDP has scaled up by 4.7x in the last two decades
Per Capita GDP (USD)
2,139
FY10-20: Rise by 1.9x; 6.4% CAGR
2,045
2,019
FY00-FY20 : Rise by
1,768
4.7x; 8% CAGR
1,641
1,610
1,496
1,486
1,481
1,415
1,149
FY00-10: Rise by 2.5x; 9.6% CAGR
1,073
1,041
841
743
652
567
488
458
466
459
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Share of consumption* and investments in GDP over the past two decades (%)
(% of GDP)
Consumption* Investments
24.3 24.2 24.8 26.8 32.8 34.7 35.7 38.1 34.3 36.5 36.5 39.0 38.7 34.2 32.2
33.8 33.5 32.1 32.0
77.2 77.4 75.8 73.8 70.4

70.1 69.2 68.0 67.2 68.6 69.1 67.5 67.3 67.1 67.9 68.6 69.4 69.6 69.8
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
* Personal + Government Data for Gross capital formation is not yet available for FY20
Note: Numbers add up to more than 100% because it doesn't include net exports and discrepancies . Source: CSO, CEIC, MoFSL

India posted its first current account surplus in 13 years in 4QFY20
Current account balance (% of GDP)
4.0
1.0
-2.0
-5.0
-8.0
2QFY09
4QFY09
2QFY10
4QFY10
2QFY11
4QFY11
2QFY12
4QFY12
2QFY13
4QFY13
2QFY14
4QFY14
2QFY15
4QFY15
2QFY16
4QFY16
2QFY17
4QFY17
2QFY18
4QFY18
2QFY19
4QFY19
2QFY20
4QFY20
2QFY21
Exports (USD B) Imports (USD B)
330
314
313
310
306
304
300
276
262
251
201
370
489
491
450
448
381
384
466
514
474
259
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21*
(*Apr-Dec'20 )

Tax-to-GDP ratio at decade low
Net Tax-GDP (%)
8.8
8.2
7.9
7.3 7.3 7.5 7.3
7.2 7.3 7.2 7.2
6.9 7.0 6.9
6.9 6.7
6.6
6.3 6.3
5.7
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Fiscal Deficit (% of GDP)
6.5
6.0 6.0 5.9
5.7
5.5
5.2
4.8 4.9
4.5 4.6
4.3 4.1
3.9 4.0 3.9
3.3 3.5 3.4 3.4
2.5
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Strong capital inflows led to record high foreign exchange reserves
Forex Reserves (USD) Cumulative flows
of USD168b
581
Cumulative flows of USD108b
413
478
305 425
342 360 370
294 292 304
(*As on 25th
Dec'20)
Surge in India’s forex reserves in CY20 at record high v/s other EMs
Change in forex reserves in CY20* USD b (ls) % (rs)

25.7
19.0
117
13.0
87
6.7 7.4
5.1
3.4 2.7
1.6
(0.2) 35
(2.4) 17 28 28 29
(1) (1) 4
2
Taiwan
Malaysia
Thailand
Brazil
Korea
Russia
China
Indonesia
S Africa
Philippines
India
54 356 105 134 105 436 583 253 513 3,310 575
*Up to Nov’ 20 Source: International Monetary Fund (IMF), RBI, CEIC, MoFSL

Interest rates at decade low, a major boost for the coming decade
10 year G-Sec
10.9
8.8
8.4 8.2 8.4 8.3
7.8 7.9 7.9 7.8 7.7
7.6
7.1 7.3 7.0
6.9 6.9 6.7
6.2 6.0
5.4
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21*
(*Average up to 31st Dec'20) (%, yearly average)
Repo rate
8.5
8.0
7.5 7.5
6.8 6.8
6.3 6.0 6.3
4.4 4.0
(*As on 31st Dec'20)

USD/INR: First decade was stable, second decade saw significant depreciation
78.0
USD/INR
73.1
68.0
Currency depreciated
by 63% during the
58.0
decade
Currency was quite

46.7 stable in last decade
48.0 44.7
38.0
Dec'00
Dec'01
Dec'02
Dec'03
Dec'04
Dec'05
Dec'06
Dec'07
Dec'08
Dec'09
Dec'10
Dec'11
Dec'12
Dec'13
Dec'14
Dec'15
Dec'16
Dec'17
Dec'18
Dec'19
Dec'20
Oil (WTI): Journey from over 100 to negative territory
150
Geopolitical tensions in the

Strait of Hormuz raise prices to
above USD100/bbl
100
OPEC led supply cuts pushes prices to
above USD70/bbl in 2018
50
US shale oil production leads to a fall in WTI from above

USD 100/bbl to below USD 30/bbl
0
COVID-led demand destruction leads

to oil prices falling to a negative
USD37/bbl
-50
Dec'10
Dec'11
Dec'12
Dec'13
Dec'14
Dec'15
Dec'16
Dec'17
Dec'18
Dec'19
Dec'20
Jun'11
Jun'12
Jun'13
Jun'14
Jun'15
Jun'16
Jun'17
Jun'18
Jun'19
Jun'20
Credit growth ends CY11-20 at an almost five decade low
Credit growth YoY (%)
40% 37%
30%
Credit growth has fallen to 5.7% YoY – lows that

were last seen post demonetization
20%
10% Credit growth fell to 13% in Sep'09

from 37% YoY in Mar’06 13%
6.1%
0%
Dec'00
Dec'01
Dec'02
Dec'03
Dec'04
Dec'05
Dec'06
Dec'07
Dec'08
Dec'09
Dec'10
Dec'11
Dec'12
Dec'13
Dec'14
Dec'15
Dec'16
Dec'17
Dec'18
Dec'19
Dec'20
KEY RESEARCH REPORTS OF 2020
A Decade of Triumphs and Trials | January 2021 June 2020

KEY RESEARCH REPORTS OF 2020
A Decade of Triumphs and Trials | January 2021 June 2020

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BUY >=15%
SELL < - 10%
NEUTRAL > - 10 % to 15%
UNDER REVIEW Rating may undergo a change
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measures to make the recommendation consistent with the investment rating legend.
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endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required
from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the
securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of
these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is
already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This
document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This
report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all
jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees,
agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the
information. The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL
or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered
by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website www.motilaloswal.com.
CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment
Adviser: INA000007100; Insurance Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered
through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal
Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd.
which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper
research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market
risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Bench.
June 2020

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2010-20

A Decade of Triumphs and Trials | January 2021 2 June 2020

gone by Federal Reserve rate

Oil prices touched

A Decade of Triumphs and Trials | January 2021 3 June 2020

2018 US-China trade war

Mr Aditya Puri, MD of HDFC Bank,

gone by ILFS crisis roiled the

2020 Pulwama attack and

A Decade of Triumphs and Trials | January 2021 4 June 2020

A Decade of Triumphs and Trials | January 2021 5 June 2020

CY10-20 (%, CAGR) CY10-20 (%, CAGR)

US - S&P 500 12 US - S&P 500 12

India - Nifty 9 Taiwan 5

Brazil 6 South Korea 4

Taiwan 5 India - Nifty 3

South Korea 3 MSCI EM 1

MSCI EM 1 China (HSCEI) -2

China (HSCEI) -2 Brazil -6

A Decade of Triumphs and Trials | January 2021 6 June 2020

Hong Kong 4 4 4 6.5 18 10 7 0

United Kingdom 3 5 5 3.3 -6 -1 0 -2

South Korea 13 11 10 2.1 46 12 7 3

A Decade of Triumphs and Trials | January 2021 7 June 2020

World m-cap (USD t)

India’s share in global m-cap at its historical average

India's Contribution to World Mcap (%)

A Decade of Triumphs and Trials | January 2021 9 June 2020

Nifty-50 rebased Nifty Midcap-100 rebased Nifty Smallcap-100 rebased

Nifty-50 YoY (%) Nifty Midcap-100 YoY (%)

A Decade of Triumphs and Trials | January 2021 10 June 2020

13 CY10-CY20 (%, CAGR)

Nifty Midcap 100

Oil & Gas

Years of negative return over CY11-20

Oil & Gas

A Decade of Triumphs and Trials | January 2021 11 June 2020

A Decade of Triumphs and Trials | January 2021

Bottom 25 laggards in the past decade

A Decade of Triumphs and Trials | January 2021

Videocon Inds. SRF

Reliance Infra. Honeywell Auto

MMTC Natco Pharma

Reliance Nav. Abbott India

Rolta India Mindtree

HDIL Pidilite Inds.

JP Power Ven. Havells India

Bajaj Hindusthan Supreme Inds.

GVK Power Infra.

Tata Steel BSL

Amara Raja Batt.

Union Bank (I)

Weightage in Nifty (%) Change in weightage

Sector Dec’10 Dec’15 Dec’20 10-year 5-year

Automobiles 7.5 9.9 5.4 -2.1 -4.5

Banks - Private 14.5 20.7 24.7 10.2 4.1

Banks - Public 4.9 3.3 1.8 -3.1 -1.5

Insurance 0.0 0.0 1.5 1.5 1.5

NBFC 6.6 7.0 10.8 4.2 3.8

Capital Goods 8.7 4.2 2.6 -6.1 -1.6

Cement 1.9 2.8 2.2 0.3 -0.7

Consumer 6.8 10.1 11.5 4.7 1.5

Healthcare 3.7 7.3 3.6 -0.1 -3.7

Metals 8.4 1.3 2.0 -6.4 0.7