Midcap stocks ignore Middle East war, AI worries to jump up to 85% in 2026. More rally or sharp correction ahead?

While the Nifty 50 index declined over 7% in H1 2026, the Nifty Midcap 150 index gained 2.5%, supported by strong earnings in capital goods, defence, and industrials. Domestic flows remained resilient with equity mutual fund inflows rising to $500 billion by March 2026 and monthly SIP contributions at $321 billion, cushioning midcaps from heavy FII selling concentrated in largecap names like Reliance Industries, TCS, and HDFC Bank. Analysts flagged crude oil above $100/bbl, SIP continuity, and Q1 FY27 earnings due in July as key swing factors for the second half.