He said higher oil prices are weighing on India’s growth outlook and pushing up inflation, creating challenges for equity markets. However, he expects measures announced by the Reserve Bank of India (RBI) to support the rupee and improve capital flows to help stabilise the macro environment over time.
“These measures can be pretty meaningful over a period of time… these could end up hopefully pulling in tens of billions of dollars,” he said.
According to JPMorgan, India’s vulnerability stems from its dependence on imported crude oil. Higher oil prices widen the current account deficit (CAD), increase pressure on the balance of payments (BoP) and weigh on the rupee.
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He added that the most important trigger for a macroeconomic improvement would be a decline in oil prices and a resolution of the conflict in West Asia.
Despite these challenges, corporate India remains optimistic about the year ahead. JPMorgan used artificial intelligence (AI) to analyse earnings-call transcripts across 42 sectors and found that most companies continue to guide for double-digit growth in the fiscal year 2026-27 (FY27).
However, Mookim cautioned that earnings expectations may need to be revised lower if the conflict drags on and energy disruptions continue. While upstream energy producers and refiners could benefit from elevated oil prices, consumer-facing sectors are likely to remain under pressure.
Apart from energy prices, Mookim identified weaker monsoon conditions as another risk for the economy. Lower rainfall could affect agricultural output and contribute to food inflation at a time when farmers are already facing input-cost pressures.
JPMorgan remains constructive on defence and renewable energy. Mookim said defence spending should continue to support domestic manufacturers, even as the government balances fiscal pressures. In renewable energy, he pointed to the rapid growth of battery energy storage projects and falling battery costs as drivers of long-term investment.
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Mookim also sees pharmaceuticals benefiting from a weaker rupee. He expects the currency to remain at weaker levels than before the recent geopolitical tensions, providing support for export-oriented businesses.
Among sectors, financials remain JPMorgan’s preferred investment theme. Mookim said banks are likely to be the biggest beneficiaries of an improvement in economic growth, investor sentiment and macro stability.
He noted that banking stocks have become more reasonably valued following the recent market correction and offer a direct way to participate in India’s medium-term growth story. While smaller banks may deliver faster growth, Mookim said large private sector banks remain the preferred choice for long-term investors.
“The biggest beneficiary of a macro improvement is the financials,” he said.
For the full interview, watch the accompanying video
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