The distinction between consistency and alpha — because growth is now higher outside of large cap indexes
Motilal Oswal Mutual Fund September 2026 Market Outlook The Motilal Oswal market outlook September 2026 argues this is a time when investors would have to understand the distinction between consistency and alpha — because growth is now higher outside of large cap indexes. Motilal Oswal market outlook September 2026: the consistency-vs-alpha distinction This month’s Motilal Oswal market outlook September 2026 briefing comes from Motilal Oswal Mutual Fund. Read alongside the Kotak September outlook and the DSP Netra September foundational edition. CONSISTENCY Close to Index ALPHA Excess Over Benchmark WHERE GROWTH IS Outside Large Caps Q1 EARNINGS Good, Across the Board Summary The Motilal Oswal market outlook September 2026 opens on a definitional distinction. Consistent returns are generally associated with performance closer to the relevant index returns; alpha refers to excess return over a benchmark. This edition is about why, now that growth is higher outside of large cap indexes, the two need separating. The detail The difference between consistency and alpha Consistent performance is achieved with constructs close to index and being very index aware. Active ratios may be high, but the construct could still be close — a stock held outside the index but in the same sector. Up until FY20 and FY21 large caps delivered better earnings growth versus small and midcaps over most periods since the start of the century, and outcomes from constructs away from the index were not satisfactory. Now growth is higher outside, so such constructs may provide greater opportunity over a period of time — though they can have different risk characteristics. FPI holdings have declined across the board but remain meaningful at close to 20% in large caps. FPIs are selling lower growth index heavy sectors, which could create opportunities for growth oriented investors to generate alpha. Flows appear to be following earnings. Takeaways from Q1 result season The MO universe excluding OMCs grew sales, EBITDA and PAT by 18%, 15% and 22% year on year, led by BFSI at 19%; metals grew 57% and oil and gas ex-OMCs 54%. Airlines, cement and OMCs dragged the aggregates. The broad market recorded higher earnings growth than large caps: large caps grew 21%, midcaps 23% and small caps 31%. Risks at this juncture, and the opportunities that arise out of the solutions Many of the risks of the past period seem to be getting addressed — oil below $90, FPI flows more neutral, the rains have come, reserves past $700 billion, the market still below February 2026 levels and valuations defendable. Key risks now include the large supply of paper, though some issuances have been withdrawn; the war in the Middle East seems to be elongating and preventing a further fall in oil prices; and trade sanctions seem to be a continuous threat. The only way to insulate a country against the oil price increase is to electrify with domestic fuel sources — solar, wind and hence BESS, coal, biomass. Forex stress galvanizes attention on import substitution. What this means for investors Overall outlook The AMC’s closing points, and ours: It believes much of the uncertainty is already reflected in market prices. Uncertainties will remain, but investors may learn to navigate them. Domestic focused businesses and those with a US manufacturing base may be relatively less exposed to certain risks. It thinks equities continue to remain an asset class with potential for long-term growth while being volatile, and newer spaces continue to provide opportunities for alpha. The Motilal Oswal market outlook September 2026 briefing sits alongside the Kotak September outlook and the DSP Netra September foundational edition. For the underlying regulatory framework, see the Association of Mutual Funds in India. Equity Motilal Oswal Mutual Fund Market Outlook Alpha Index Investing Earnings September 2026 Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully. The views expressed are those of the speaker and do not constitute investment advice.
