The market corrected after a strong Q1, but broader markets remained resilient.
Indian markets saw a meaningful correction in Q2 FY27 after the strong rally in Q1. Nifty 50 declined 5.2%, while CNX 200 fell 4.6%. However, the broader market held up better, with Mid-Small 400 declining only 2.1% and Smallcap 250 gaining 0.4%.
For FY27 so far, the broader market continues to lead. Nifty Next 50 is up 15.6%, Mid-Small 400 is up 16.9% and Smallcap 250 is up 24.6%, compared with just 1.3% for Nifty 50.
Global uncertainty increased during the quarter.
Higher global bond yields, crude prices and geopolitical developments kept markets volatile. Foreign flows remained an important source of pressure, while investors continued to reassess the pace of global rate cuts.
The domestic rate environment has also become less supportive, with the RBI raising the repo rate to 5.5%. Going forward, global liquidity, crude and currency movements will remain important variables for Indian equities.
Gold continued to provide diversification.
Gold remained one of the strongest-performing assets during the quarter, gaining 4.99%. Continued geopolitical uncertainty and demand for safe-haven assets supported the trend.
Our Mi Allcap GOLD strategy also remained positive during Q2, gaining 0.7%, and is up 17.1% for FY27.
Sector leadership changed sharply during Q2.
Media, IT, Gold and Pharma were the strongest sectors, gaining 7.09%, 5.35%, 4.99% and 4.39% respectively.
On the other hand, FMCG, Energy, Infrastructure and Capital Markets were among the weakest sectors, declining 8.78%, 7.81%, 7.01% and 6.57%.
The rotation highlights the changing character of the market. Leadership is becoming more selective and momentum is moving rapidly between sectors.
WeekendInvesting Strategies
The quarter tested portfolios after a very strong Q1.
Most equity strategies declined along with the market during Q2, but the overall FY27 performance remains strong.
Mi 35 continues to lead at 32.3%, followed by Mi ST ATH at 25.5%, HNI Wealth Builder at 20.8%, Mi MT Allcap at 19.2% and Mi 20 at 18.0%.
Two strategies remained positive during Q2 despite the market correction — Mi ATH 2 (+1.7%) and Mi Allcap GOLD (+0.7%).
The key benefit of a systematic approach is that it does not require us to predict when a correction will happen. It allows the portfolio to respond to changing trends and market leadership.
Outlook
Selective optimism with greater emphasis on risk management.
The Indian market remains structurally positive, supported by improving earnings, domestic liquidity and the continuing long-term growth story.
However, after the strong gains of the first half, we expect greater volatility and more selective participation in H2 FY27.
The key things to watch will be earnings growth, crude prices, global interest rates, FII flows and market breadth.
We continue to believe that the best approach is to remain invested while allowing the trends to determine exposure. Rather than attempting to predict the next market move, we will continue to focus on following strength, reducing exposure when trends weaken and allowing capital to move towards emerging leaders.
Dynamic. Disciplined. Adaptive.
