Midcap, smallcap rally has eroded margin of safety, rotate to largecaps: Axis Direct's Rajesh Palviya

Axis Securities has revised its December 2026 Nifty base-case target down to 27,220 (from 28,100), with a bull case of 28,615 and a bear case of 23,030. The brokerage flags that the midcap and smallcap rally has eroded margin of safety and recommends rotating into largecaps, while Q1FY27 earnings are expected to deliver around 11.2% YoY PAT growth for the Nifty. FII flows are viewed as tactical rather than structural, with about $13 billion in FY27 YTD outflows, and a structural return hinges on crude price moderation, earnings visibility, and a stable rupee.