In turn, JPMorgan has upgraded tech and Taiwan to “overweight” and raised its targets for the TAIEX index. JPMorgan’s downgrade comes just a day after HSBC downgraded India to “underweight”, marking its second downgrade in less than a month.
For the Nifty 50, JPMorgan has cut its bull case price target to 30,000 from 33,000 earlier. The base case target, which earlier was 30,000 has been cut to 27,000, while the bear case price target for the benchmark index to 20,500 from 24,000 earlier.
JPMorgan has cited elevated valuations relative to emerging market peers, earnings risks, dilution concerns, and limited exposure to next-gen tech as the key factors behind the downgrade.
Rajiv Batra of JPMorgan wrote in his note that India’s premium to the MSCI EM has compressed to 65% from its peak of 109%, reflecting some of the re-rating, but peers like Korea, Brazil and China still offer cheaper entry points for similar or better forward growth.
JPMorgan’s sector analysts have cut their financial year 2027 earnings growth estimates by 2% to 10% across key sectors and as a result, they have lowered their 2026 and 2027 MSCI India EPS growth by 2% and 1% respectively to 11% and 13%.
Batra further wrote that large domestic inflows have cushioned a record $37 billion FPI exodus, but a $64 billion pipeline in the form of IPOs and QIPs, along with promoter sales are diluting existing holders and capping upside, which is a stark contrast to the US, where buybacks persistently retire equity.
India’s largecap index has minimal exposure to AI, datacenter and semiconductor representation, relative to the US, Korea, China and Taiwan, according to JPMorgan, who added that a subdued monsoon is an added risk to their outlook.
“Overall, we see better opportunities elsewhere in Emerging Markets, until valuations de-rate further or earnings visibility improves,” JPMorgan said.
