Outlook for H2 FY27: Earnings, flows and valuations
Indian equities could witness a fresh re-rating in the second half of FY27 as earnings growth accelerates and domestic institutional investors maintain robust support. However, high valuations in select segments suggest investors may need to rethink allocations as the next phase unfolds.
- Earnings trajectory could lift valuations: As corporate profits improve, multiple expansion could drive gains beyond the October start.
- Healthy domestic flows: Sustained DIIs participation supports market breadth and stability.
- Valuation divergence across segments: Mid- and small-cap pockets appear rich versus earnings visibility, calling for a cautious look at position sizes.
- Portfolio rebalancing as a strategy: Aligning exposure to risk with the evolving earnings narrative could help balance potential upside and downside.
Investors should evaluate their stock selection, sector weights, and risk controls before committing to a shift in strategy as earnings momentum emerges in the months ahead.
