UBS Highlights Midcap Valuations, Fund Flows, and Select Picks for 2026

UBS reports that India's midcap and smallcap stocks underperformed large caps in 2025, with valuations correcting but remaining near five-year averages and above large-cap levels. Despite limited valuation downside, sustained domestic fund inflows have supported midcap resilience. UBS highlights that future returns will rely more on company earnings than market momentum and identifies eight midcap stocks with strong earnings visibility as potential outperformers in 2026, while cautioning that a reversal in fund flows could impact performance.