Motilal Oswal sector of the week: Capital markets; Nuvama, UTI AMC top bets

Nuvama and UTI AMC are top stocks in the capital markets sector for Motilal Oswal, as the medium-term outlook for the sector is constructive

India’s capital markets delivered a steady performance in June 2025, marked by stable equity turnover, surging commodity activity, and robust mutual fund inflows. While derivatives volumes witnessed a modest dip, retail participation remained resilient, reflecting a healthy market ecosystem.

 

The aggregate average daily turnover (ADTO) for the month stood largely unchanged at ₹347 trillion. Equity cash segment volumes rose 2 per cent month-on-month (M-o-M), supported by positive market sentiment. However, derivatives turnover saw a slight pullback, with futures and options (F&O) ADTO down 1 per cent M-o-M. A sharper 17 per cent M-o-M decline in option premiums to ₹630 billion highlighted reduced speculative activity. Retail investors also showed some caution, with cash and F&O premium ADTO slipping 1 per cent and 10 per cent M-o-M, respectively.

 

 

The commodities market emerged as the bright spot, posting a 25 per cent M-o-M surge in ADTO to ₹3.4 trillion - its highest-ever level. MCX volumes jumped 19 per cent M-o-M to ₹71.3 trillion, fueled by volatility in global crude and metals. Silver options witnessed a 6x spike, while gold, crude oil, and natural gas options also clocked strong sequential growth. This renewed interest signals a growing shift toward commodity-linked instruments among retail and institutional investors alike.  Track Stock Market LIVE Updates

 

Mutual fund flows continued their uptrend. Monthly average AUM (MAAUM) touched a record ₹74.8 trillion (+4 per cent M-o-M, +22 per cent Y-o-Y). Equity MAAUM rose to ₹32.7 trillion, aided by ₹236 billion in net equity inflows—up 24 per cent M-o-M. SIP inflows hit an all-time high of ₹273 billion. A revival in primary markets also contributed to the positive tone, with five IPOs collectively raising ₹81 billion.

 

India’s investor base continues to broaden, with 2.5 million new demat accounts opened in June, taking the total to 199 million. This consistent retail engagement underscores strong confidence in capital markets despite intermittent regulatory headwinds.

 

The capital markets sector remains on a solid footing, backed by sustained MF inflows, deepening commodity participation, and growing retail investor involvement. While any further tightening of F&O norms may affect near-term volumes, the broader momentum remains intact. We believe the medium-term outlook is constructive, anchored by healthy flows, increasing digitisation, and expanding investor participation across segments.

Nuvama – Target price: ₹9,600

We remain positive on Nuvama, driven by broad-based revenue growth across business segments. While wealth segment yields are likely to moderate, improved profitability in the asset management vertical should offer partial offset. Operating leverage from a larger revenue base is expected to improve cost-to-income ratio sequentially. Continued investments and execution of the expansion strategy remain key monitorables. We expect an 18 per cent/19 per cent revenue/PAT CAGR for FY25-27.

UTI AMC – Target price: ₹1,550

UTI AMC expanded its product suite with launches of a Quant Fund (Q4) & Multi-Cap Fund (Apr 2025), along with smart beta & thematic index offerings. Q4 QAAUM rose 17 per cent Y-o-Y, led by strong passive inflows & rising SIP traction. It continues to deepen penetration in B30 cities, with 22 per cent of monthly average AUM in March 2025 from these regions, vs industry average of 18 per cent. It also added 68 new Tier-2/3 branches in FY25, aiding 0.9m net folio additions. We project AUM/Revenue/Core PAT CAGR of 17/13/20 per cent over FY25–27. Growth will be supported by product innovation, strong EPFO mandates, digital distribution, and increasing demand for low-cost passive and hybrid investment strategies.  (Discalimer: This article is by Motilal Oswal Financial Services Research desk. Views expressed are its own.)