Mookim said India’s local economic backdrop is supportive, with the April-June quarter of 2026 (Q1FY27) numbers coming in materially better than expected. Valuations, especially among large caps, have also eased. “The value trade is probably on in Indian equities better than it has been for the last 3 years,” he said.
The renewed interest from long-only foreign investors is another positive. Mookim said volatility in North Asian technology stocks and more reasonable valuations in Indian large caps are encouraging investors to look at India again. However, he does not expect foreign inflows to surge immediately.
The bigger concern is the global backdrop. Mookim pointed to elevated US bond yields, saying investors have an attractive alternative in relatively safe dollar assets. “When 10-year bond yields are at these levels, you’re not going to get EM assets do very well,” he said.
He also highlighted the large pipeline of equity issuance in India. Initial public offerings (IPOs), qualified institutional placements (QIPs) and block deals are absorbing significant liquidity, with Mookim estimating that new equity supply is currently larger than monthly inflows into domestic mutual funds. While this can weigh on liquidity in the short term, he sees the development as healthy over the medium term as it broadens the market and creates more investment opportunities.
On monetary policy, Mookim does not expect an immediate rate hike from the Reserve Bank of India, despite growing market speculation. JPMorgan’s base case is for the RBI to keep rates unchanged for now.
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Sector-wise, JPMorgan remains positive on financials and also likes pharma and healthcare, defence, and select power and power-equipment companies. Within consumption, Mookim prefers discretionary businesses over staples, where high valuations could continue to come under pressure.
He is also cautious on IT despite easier valuations. According to Mookim, the sector’s growth outlook remains uncertain, making it difficult to turn aggressively bullish at this stage.
On the broader emerging-market outlook, Mookim said India remains a structural growth market over the next three to five years, but its relative growth advantage is currently less pronounced. “I doubt, I will not hold my breath for a flood of FII money coming in the next quarter or so,” he said.
Mookim also expects artificial intelligence (AI) related capital spending to remain strong in the near term, with 2027 capex potentially exceeding 2026 levels. However, the eventual return on that investment remains an important question for markets.
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