Motilal Oswal Private Wealth keeps overweight mid-cap Stance as FIIs return to Indian markets

The firm draws a direct contrast with South Korea’s KOSPI, which fell approximately 40 per cent from its June 2026 peak.
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Motilal Oswal Private Wealth (MOPW) has retained its overweight allocation to mid and small-cap stocks in its August 2026 Alpha Strategist report, titled “Clearing Skies,” maintaining portfolio allocation at 40 per cent hybrid/large caps, 10 per cent global equities, and 50 per cent mid and small caps.

The report notes that foreign institutional investors turned net buyers of Indian equities in July 2026 for the first time in four months, recording net inflows of $2.5 billion. The Nifty 50 rose 2.2 per cent month-on-month to close at 24,384 in July, its first close above 24,000 in five months, though the index remains down 6.7 per cent for the calendar year to date. Q1FY27 earnings for Nifty 50 companies grew 11 per cent year-on-year against a 7 per cent estimate, with small-caps posting the strongest growth at 32 per cent against a 26 per cent estimate.

The firm draws a direct contrast with South Korea’s KOSPI, which fell approximately 40 per cent from its June 2026 peak within weeks after a leverage-driven rally in AI-linked semiconductor stocks unwound. Single-stock leveraged ETFs tied to Samsung and SK Hynix, two stocks that together account for over 40 per cent of the KOSPI, amplified the decline, with leveraged AUM collapsing from roughly $50 billion to $17 billion. MOPW argues India is structurally insulated from such dynamics, citing that 78 per cent of MSCI India revenues are domestically generated and 66 per cent of Nifty 500 market capitalisation sits in domestic-facing sectors.

On monetary policy, the Reserve Bank of India held its repo rate unchanged at 5.25 per cent with a neutral stance at its August meeting, raising its FY27 GDP growth forecast to 6.7 per cent and trimming its CPI inflation projection to 5.0 per cent. The 10-year government securities yield has eased to approximately 6.75–6.80 per cent. MOPW expects yields to remain range-bound between 6.6 per cent and 6.9 per cent, limiting near-term trading opportunities in duration. The firm continues to favour accrual strategies, directing 55–60 per cent of fixed income allocations toward performing credit, private credit, high-yield NCDs, and InvITs.

On commodities, gold has rallied to around $4,400 per ounce in early August, up approximately 9 per cent since end-July, driven by a near five-fold jump in central bank purchases between Q1 and Q2 2026. Silver rebounded to around $66 per ounce, gaining roughly 14 per cent over the same period. MOPW maintains a neutral overall allocation to precious metals but favours gold over silver, citing silver’s greater sensitivity to global industrial cycles.

The firm recommends lump-sum deployment in hybrid strategies and a staggered approach for pure equity strategies, with market corrections to be used for accelerated allocation.

Published on August 28, 2026