Speaking on the sidelines of the JPMorgan India Conference 2026, Ankur Rudra, Head-APAC Telecom and India TMT Research at JPMorgan, outlined a prolonged recovery timeline for large technology companies, alongside a broader assessment of the quick commerce, telecommunications, and financial technology sectors.
The technology sector is currently negotiating a three-cycle framework that includes macroeconomic weakness, AI deflation, and rising hardware costs.
He added, “There’s another four to six quarters of AI deflation yet to play out. That will be a headwind on the names in the near term and and for the next those few quarters that will keep playing out.”
Additionally, macroeconomic uncertainty has flared up again due to the Middle East conflict and the potential for higher interest rates, which typically slows down discretionary spending. This was a factor in the first quarter and became a larger concern towards the end of the second quarter.
Furthermore, sharply rising token and hardware costs are crowding out spending on software and services, a trend that was aggressive in the first quarter and is expected to continue.
With the rupee being less favourable this quarter compared to the last, margins will face additional pressure. While smaller IT companies have been growing meaningfully faster, there is no expected change in the slower trajectory for large-cap companies.
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Shifting to the financial technology space, the recent imposition of a 40 basis point Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions has emerged as a positive surprise. The market had largely anticipated a rate between 25 and 30 basis points.
Passing this on a three-month basis is seen as a positive development, and the higher quantum implies a significant industry revenue pool of approximately ₹170 billion, which is expected to meaningfully benefit fintech companies.
In the quick commerce segment, competitive intensity has escalated dramatically. The landscape has expanded from a three-player market about one and a half to two years ago to five or six serious contenders today.
Rudra added, “The leading players are doing well, what we have seen is the competitive activity has increased dramatically. So we have seen significant amount of attraction. There’s been a bit of an acceleration on dark store addition by the leaders. The incumbents have added a bit more dark stores. They seem to be stepping up to the plate receiving competition.”
On the telecommunications front, industry consolidation continues with leading players steadily gaining market share. While there is an element of recapitalisation for weaker players, historical global trends suggest it is difficult for laggards to stage a comeback.
The gap in capital expenditure and network quality remains meaningful. Any telecom operator looking to regain lost market share will have to significantly overinvest in capex, rather than merely maintaining it at current revenue market share levels.
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