Mid and small-caps look expensive: Should you rebalance your portfolio as earnings could lift equities from October? — SkimNews
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- Omniscience Capital flags elevated mid- and small-cap valuations, with the Nifty Smallcap 250 at ~34x trailing P/E and the Nifty Midcap 150 at ~30x, versus ~20x for the Nifty 100.
- Ashwin K. Shami, President & Chief Portfolio Manager at OmniScience Capital, warns that 'multi-year forward earnings execution is fully priced in,' exposing investors to 'severe de-rating risk.'
- Omniscience Capital expects Indian equities to re-rate as H2 FY27 earnings (October 2026 to March 2027) accelerate alongside a steady return of domestic institutional capital.
- Foreign institutional investors have turned net buyers on multiple occasions after a two-year moderation in Indian equity valuations.
- Omniscience Capital identifies banking and financial services, infrastructure and power, and business services as preferred sectors, backed by resilient credit growth, rising electricity demand, and a recovery in corporate capex.
- Global risks flagged by Omniscience include US 10-year Treasury yields near one-year highs of 4.6%-4.7%, the US Federal Reserve's September 16 policy decision, and crude oil prices that have surged 20-30% over the last month amid escalating Middle East tensions.
Why it matters: For retail investors concentrated in Indian mid- and small-caps, the 34x and 30x trailing P/E multiples leave little room if H2 FY27 earnings underperform — Omniscience's Shami explicitly flags 'severe de-rating risk.' The firm's tilt toward banking, infrastructure, power, and business services points to where it sees better risk-adjusted returns against a backdrop of US 10-year yields near 4.6%-4.7% and crude oil up 20-30% in four weeks.
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