The first half of FY27 has witnessed significant divergence between large-cap and small-cap segments, according to Quarter of Divergence: Resilient India, Restless World by Prateek Nigudkar, Senior Fund Manager at Shriram AMC. As reported by Mint, the Nifty 50 rose just 1.3% in H1FY27 while the Nifty Smallcap 250 gained 24.6%, with the Nifty 50 falling about 6% in September alone. Nigudkar attributes much of this performance gap to contrasting investment flows, noting that large-caps now offer better valuations relative to their historical averages. This divergence pattern is part of a broader global trend where investors are increasingly looking to capitalise on uneven market performance, driven by developments in artificial intelligence, geopolitical divisions and diverging regional economic prospects.
Nigudkar remains positive on banks and the life insurance segment, citing attractive valuations following the market correction. According to Mint, several high-quality private banks are trading near or below their long-term average valuation multiples despite steady credit growth, stable asset quality and a strong economy. On life insurance, regulatory uncertainty around the Insurance Regulatory and Development Authority of India's (IRDAI) proposed rules on expenses of management (EoM) and distribution is flagged, though expectations are for more measured final regulations with longer implementation timelines.
The automobile sector shows positive prospects with Nigudkar remaining optimistic about volumes following GST-related changes. As reported by Mint, the festival season serves as a key near-term test of demand, while raw-material inflation in steel, aluminium and precious metals could weigh on margins if manufacturers cannot pass on higher costs. Investors can compare automobile-focused funds with the Nifty Auto index to assess sector performance.
The power value chain remains positive, supported by industrial activity, electrification, data centres and transmission capital expenditure, according to Mint. Nigudkar has added to hospital exposure following sharp corrections in hospital stocks, with the Nifty Healthcare index offering broader healthcare benchmarking. The Nifty Power index serves as a relevant benchmark for power-focused funds, while the Nifty Energy index provides broader energy-sector exposure.
In real estate, Nigudkar has added a developer from the National Capital Region citing its large, low-cost land bank and strong pipeline of luxury housing launches. As reported by Mint, he sees resilience in premium housing demand with multi-year visibility on pre-sales. For telecom, the outlook remains neutral to positive as headline tariff hikes may be delayed until FY28, with ARPU expected to continue grinding higher through plan re-engineering and premiumization.
