• Earnings performance: Robust corporate earnings supported the market following a historic consolidation where four consecutive monthly expiries closed within a 0.5% (100-point) range, with 80% of sectors delivering positive surprises. Over the past decade, Nifty 50 PAT grew more than threefold from ₹2.99 lakh crore to ₹9.23 lakh crore, driven by a 12.9% compound earnings increase.
• FII weightage trend: Foreign institutional investors resumed buying in July and August after India's MSCI weightage saw a slight uptick, following seven consecutive reviews where the weight dropped from 20.5% down to 11.8%. The sustainability of foreign inflows will be monitored through upcoming index computations ahead of the November review.
• Market manipulation safeguards: SEBI's interventions and closing auction sessions should be supported as they curtail end-of-day price manipulation on index review dates impacting passive investors—who account for 35% of FII ownership—as well as intentional algorithmic cash-derivative arbitrage.
• Large-cap allocation strategy: With broader market momentum stocks exhibiting stretched valuations, investors are advised to focus on off-beat sectors and top 10–15 large-cap heavyweights that have not yet run up. Potential weight increases in upcoming FTSE and MSCI reviews could trigger re-ratings and provide momentum to large-cap indices.