JPMorgan has downgraded Indian equities to Neutral from Overweight, warning that the Nifty could fall to 20,500 in a bear-case scenario, indicating a potential 15% decline. The downgrade reflects concerns over elevated valuations and uncertainties related to the Iran war. The brokerage flagged risks to earnings, including possible energy supply disruptions affecting various sectors.
Analysts have cut FY27 earnings estimates by 2% to 10% across key segments and lowered CY26E and CY27E MSCI India EPS growth forecasts by 2% and 1% to 11% and 13%, respectively. JPMorgan noted that India’s large-cap universe lacks significant exposure to high-growth sectors like AI and semiconductors compared to the US and other markets.
The brokerage sees better opportunities in other emerging markets until valuations correct or earnings visibility improves. It remains overweight on Financials, Materials, Consumer Discretionary, Hospitals, Defence, and Power, while underweight on IT and Pharma.
