Smallcase managers project EPS estimates for the Nifty and the BSE Sensex in the range of Rs 1,280 – Rs 1,320. Based on the expected earnings trajectory, the index is likely to trade within a valuation band of 22X–24X, reflecting confidence in India’s domestic growth momentum and corporate profitability, a media release.
Smallcase is a leading provider of investment products & platforms for the Indian capital markets industry. Launched in 2016, its offerings across listed stocks, ETFs & REITs. It has served over 10 million individual investors to date, a media release said.
“We expect NIFTY 50 to be in the range of 28,000–30,000 in FY27, a potential upside of nearly 15%–25% from current levels, supported by continued strength in sectors such as Banking, Capital Goods, Telecom, and domestic manufacturing themes,” Ashwini Shami, smallcase manager, President and Chief Portfolio Manager, OmniScience Capital, said.
He made the remarks during a webinar titled ‘FY27 Market Compass: Earnings, Equity & Sectoral Outlook’.
The webinar also features Anuj Jain, CIO and Co-Founder of Green Portfolio Private Limited, and Sneha Jain, smallcase manager & Founder and CEO of Wealth Trust, shared their perspective on the subject
Sectors to bet on
Jain of Green Portfolio said he remains constructive on sectors linked to India’s domestic capex and manufacturing themes, including capital goods, industrials, defence, and BFSI, where earnings visibility and policy support continue to remain favourable. “Defensive segments such as Pharma and select FMCG are expected to provide portfolio stability amid market volatility, while IT Services may offer gradual recovery opportunities as global demand conditions improve. The implementation of key FTAs with regions such as the EU, US, and UK will also remain important, as it could materially reshape export competitiveness and sectoral profitability,” Jain said.
“One theme which is clearly coming out of the discussion is small & midcaps, Ambareesh Baliga, smallcase manager and market analyst, said, emphasising they will outperform the large caps in the foreseeable future and there will still be pockets of opportunity in this space with performance vis-à-vis valuation mismatch.
Changing trends
Sneha Jain pointed to the ongoing shift in the balance of power, with the US going from being a beacon of stability to an unstable force. “We believe domestic story to play an integral part of any portfolio, but also businesses with a base globally, not just a manufacturing base in India. Those moving up the value chain are also preferred, she said.
Smallcase managers expect the ongoing West Asia conflict to increase pressure on India’s macroeconomic indicators in FY27 as rising crude oil prices are likely to push up the country’s oil import bill from around $123 billion in FY26 to nearly $132 billion in FY27. This could widen India’s current account deficit to nearly 1% of GDP from 0.7–0.8% in FY26. They also warned that a sustained rise in crude prices may fuel inflation, with every 10% increase in oil prices potentially raising WPI inflation by 80–100 basis points and CPI inflation by 40–60 basis points, thereby weighing on economic growth.
Reviewing FY26, the managers said markets were driven more by volatility than outright weakness as geopolitical tensions, foreign fund outflows, elevated crude prices and valuation concerns offset strong domestic fundamentals. Large-cap stocks remained relatively resilient while broader markets saw sharp divergence, making stock selection critical. They added that FY26 rewarded companies with earnings visibility, pricing power, and strong balance sheets rather than broad-based growth.
On valuations, the report noted that some pockets of the market are trading at extreme historical levels. Metals & Mining appears fully valued and vulnerable to correction, while financials and FMCG offer better risk-reward opportunities. Private banks, NBFCs, and insurance stocks are trading near cyclical valuation lows, whereas FMCG valuations have moderated close to historical trough levels.
Sectorally, FY26 saw strong outperformance from consumer discretionary, materials, real estate, banking, metals, telecom and capital goods sectors, supported by infrastructure demand, premiumisation trends, strong credit growth, tariff hikes in telecom and record order books in defense and power transmission. On the other hand, communication services, healthcare, chemicals, FMCG, and pharma underperformed due to factors such as weak demand, global oversupply, Chinese dumping, pressure on US generics and elevated R&D spending.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
