Mid and small-caps look expensive: Should you rebalance your portfolio as earnings could lift equities from October?

Indian equities could be heading for a re-rating as corporate earnings are expected to improve in the second half (H2) of the financial year and domestic institutional investors continue to support the market, according to Omniscience Capital.H2 refers to the second half of FY27, covering October 2026 to March 2027.However, investors may need to be more selective, particularly in the mid- and small-cap segments, where valuations remain elevated,For investors with significant exposure to these segments, the key question is whether the current valuations leave enough room for future returns or whether portfolios need to be reassessed.Are mid- and small-caps still expensive?Omniscience Capital points to a valuation gap across market-cap segments. While the broader market remains in a consolidation phase, pockets of small- and mid-caps remain overvalued. Consolidation is a period when markets move within a relatively narrow range without a clear upward or downward trend.