Motilal Oswal Financial Services (MOFSL) has indicated a favorable outlook for Indian equities in FY27, following a challenging FY26 characterized by 3% decline and significant underperformance compared to the MSCI Emerging Markets index, which rose 31%. The brokerage notes that a potential ceasefire in the ongoing Iran-Israel conflict could act as a catalyst for market recovery by unlocking positive sentiment. Despite geopolitical risks affecting energy supply, which sees 35-40% of India's crude demand passing through the Strait of Hormuz, domestic factors such as accommodative fiscal measures and improving GDP are expected to support growth. Currently, the Nifty trades at 18 times earnings, a 14% discount to its historical average, making valuations more attractive. However, earnings growth is projected to moderate to 10% year-on-year, down from previous quarters. MOFSL’s model portfolio favors sectors with strong growth visibility, including automobiles and PSU banks, while maintaining an overweight stance on mid- and small-cap stocks, reflecting the rising importance of emerging business models.