JP Morgan sees financials, private capital expenditure and manufacturing as the main themes emerging from its 11th India Conference, with power, electronics, defence, healthcare and premium consumption adding to the growth opportunity. The global investment banking firm prefers mid- and small-cap stocks over large caps and has ‘Overweight’ allocations to financials, industrials, healthcare, materials and consumer discretionary, while information technology is its only underweight sector.
The research house said India has absorbed higher oil prices, elevated global rates and an effective 34% US tariff, but sustained growth will depend on private capital expenditure gaining traction and demand remaining strong.
Financials: Credit growth and asset quality support the earnings outlook
JP Morgan remains positive on financials, citing resilient credit growth, benign asset quality and scope for earnings upgrades. The near-term pressure on net interest margins from foreign currency non-resident flows is expected to ease as banks deploy surplus liquidity into higher-yielding loans.
“Expect strong bottom-up trends and continued positive earnings revisions into the print, with macro the key swing factor. We believe large private banks offer an attractive entry point on NII inflection and at inexpensive valuations,” JP Morgan said.
Foreign currency non-resident deposits were about 4.8% of June 2026 deposits. JP Morgan expects net interest margins to normalise over the next few quarters as surplus liquidity is deployed, while funding costs locked in for three to five years could support margins if rates rise.
| Financial stock | JP Morgan rating |
| ICICI Bank | ‘Overweight’ |
| AU Small Finance Bank | ‘Overweight’ |
| Bajaj Finance | ‘Overweight’ |
| State Bank of India | ‘Overweight’ |
| Punjab National Bank Housing Finance | ‘Overweight’ |
| IIFL Finance | ‘Overweight’ |
| Muthoot Finance | ‘Overweight’ |
| SBI Life Insurance | ‘Overweight’ |
| Multi Commodity Exchange of India | ‘Overweight’ |
| HDFC Life Insurance | ‘Overweight’ |
| ICICI Lombard General Insurance | ‘Overweight’ |
JP Morgan said the additional liquidity from foreign currency non-resident flows is neither driving greater competition in mortgages nor lowering borrowing costs for non-banking finance companies. It named Punjab National Bank Housing Finance its top pick among housing finance companies and IIFL Finance its top pick among gold lenders.
It also said non-banking finance companies continue to gain market share in both segments, while asset quality remains strong, with risks largely confined to the micro loan-against-property segment.
Private capex: Power and the grid are at the centre of the spending cycle
JP Morgan sees private-sector capital expenditure recovering after almost a decade of below-trend spending. Private capex had been around 10-11% of GDP compared with about 17% before the global financial crisis.
The firm said new spending is emerging across thermal power, renewables, pumped storage, semiconductors, outsourced semiconductor assembly and test facilities, electric vehicle manufacturing, metals and mining and real estate.
Peak power demand is expected to rise from about 271 gigawatts to 459 gigawatts by 2035-36. Artificial intelligence, data centres and electric vehicles alone could add around 30 gigawatts. JP Morgan estimates an Rs 8 trillion transmission opportunity as the grid becomes a constraint on additional capacity.
Infrastructure and defence: L&T broadens its growth pipeline
Larsen & Toubro is a major part of JP Morgan’s private-capex theme, with management outlining investments across green energy, data centres, industrial electronics and defence.
The company plans to invest about Rs 40,000-45,000 crore between FY27 and FY31, including around Rs 15,000 crore in green hydrogen and ammonia, Rs 10,000 crore in data centres and artificial intelligence infrastructure and Rs 5,000 crore in industrial electronics manufacturing.
JP Morgan said L&T plans to double defence revenue by 2031. The company expects its defence business to grow meaningfully over the next five years, with capabilities across land, naval and air systems, including underwater and aerospace projects. Its Kattupalli shipyard is positioned for upcoming naval procurement opportunities.
L&T management also told JP Morgan that private-sector capex has gained traction across thermal power, renewable energy, pumped storage, semiconductor facilities, outsourced semiconductor assembly and test units, electric vehicle manufacturing, metals and mining and real estate.
In the Middle East, management said there have been no major project disruptions despite short-term supply-chain and logistics issues. Customers have been supportive on material availability and incremental costs, while the company’s long-standing regional presence continues to support execution.
| Industrial and infrastructure stock | JP Morgan rating |
| Larsen & Toubro | ‘Overweight’ |
| Bharat Electronics | ‘Overweight’ |
| Adani Ports and Special Economic Zone | ‘Overweight’ |
| NTPC | ‘Overweight’ |
| GE Vernova T&D India | ‘Overweight’ |
| Hitachi Energy India | ‘Overweight’ |
| Polycab India | ‘Overweight’ |
Power equipment: Transmission spending and capacity drive outlook
JP Morgan expects power-equipment orders to improve as transmission projects advance and transformer capacity constraints ease over the next 12-18 months.
GE Vernova T&D India and Hitachi Energy India are rated ‘Overweight’, while Siemens Energy India Ltd. India is rated ‘Neutral’.
Siemens Energy India management told JP Morgan that India’s engineering talent, skilled labour and established component ecosystem support exports of large power transformers to the US and Europe. The company said the quality and capability of high-voltage transformers made in its Indian factories are the same as those at Siemens Energy’s global factories.
It plans to increase transformer capacity fourfold, from 15 gigavolt-amperes to 60 gigavolt-amperes by FY30-FY32. Management also expects demand for grid-stability equipment such as static synchronous compensators to rise as renewable capacity connected to the grid increases.
On Chinese companies participating in Indian tenders, Siemens Energy India management said India remains relatively cost-competitive and that similar localisation requirements and regulations should help maintain a level playing field.
Electronics manufacturing: Exports and components become the next growth driver
JP Morgan sees electronics manufacturing services as a major opportunity, with India accounting for only about 3% of the roughly $5 trillion global electronics market and 5% of the $800 billion global electronics manufacturing services market.
Dixon Technologies aims to become a top-10 global electronics manufacturing services company within five years and a top-five player within 10 years. The company expects mobile value addition to rise from 18-20% to 40-45%, while annual mobile volumes are expected to rise from 40 million units to 65 million units through its Vivo joint venture.
Dixon is expanding into camera modules, display modules and mechanical components and is building export-focused infrastructure, including a 1.2 million sq ft Noida factory and two 100-acre campuses.
“ROCEs won’t be compromised. Dixon has been operating at 30%+ ROCEs for a long time and is conscious of not diluting that. It ensures that ROCEs don’t go below 30% whenever it plans any new investment,” JP Morgan reported from its meeting with Dixon management.
Dixon also plans to move into low-volume, high-margin businesses such as defence, medical electronics, drones and robotics and is open to acquisitions in these areas.
| Electronics manufacturing stock | JP Morgan rating |
| Dixon Technologies | ‘Overweight’ |
Healthcare: Hospitals remain supported by demand and capacity constraints
JP Morgan remains constructive on hospitals, citing demand running ahead of supply and improving execution.
The firm expects tighter hospital pricing controls, if introduced, to be more focused on consumables, while newer hospital capacity should be absorbed relatively quickly, supporting break-even and ramp-up.
| Healthcare stock | JP Morgan rating |
| Divi’s Laboratories | ‘Overweight’ |
| Apollo Hospitals Enterprise | ‘Overweight’ |
| Max Healthcare | ‘Overweight’ |
| Torrent Pharmaceuticals | ‘Overweight’ |
| Fortis Healthcare | ‘Overweight’ |
| Cipla | ‘Overweight’ |
| Anthem Biosciences | ‘Overweight’ |
JP Morgan’s pharmaceutical view centres on domestic companies targeting growth ahead of the Indian pharmaceutical market and US businesses moving towards complex, specialty and innovation-led products. Elevated input and freight costs remain a margin concern, with currency movements providing some support.
Consumer discretionary: Premium demand and smaller cities support growth
JP Morgan said demand remains healthy in discretionary categories, supported by luxury and aspirational purchases, convenience-led consumption and premiumisation.
Companies are using productivity gains and operating leverage to fund brands, technology, capacity and distribution. The firm also sees attractive unit economics in Tier-2 and Tier-3 markets as formalisation expands.
| Consumer discretionary stock | JP Morgan rating |
| Hero MotoCorp | ‘Overweight’ |
| Tata Motors Commercial Vehicles | ‘Overweight’ |
| Samvardhana Motherson International | ‘Overweight’ |
| Exide Industries | ‘Overweight’ |
| Eternal | ‘Overweight’ |
| Titan | ‘Overweight’ |
| Lenskart Solutions | ‘Overweight’ |
Titan: Premium jewellery, watches & eyewear provide growth avenues
Titan management told JP Morgan that high gold prices are weighing on lower-ticket jewellery demand, while wedding, studded and design-led jewellery remains more resilient.
The company sees room for growth through underpenetrated regional markets, jewellery formalisation, premium watches, eyewear, international expansion, Mia, CaratLane and Titan Engineering and Automation.
Titan is also expanding its jewellery portfolio through lightweight and lower-karat products, including 14-karat and 9-karat offerings. Its 9-karat portfolio has opened price points below Rs 20,000 and additional everyday-wear occasions.
Management expects premium watches, particularly products above Rs 25,000, to remain a key growth area. Eyewear is targeting more than 25% growth, supported by premiumisation, formalisation and rising awareness of vision correction.
Packaged foods: Nestlé India focuses on premiumisation
Nestlé India management told JP Morgan that its recent revenue acceleration has been supported by better execution, technology and artificial intelligence across the business, new channels such as quick commerce and e-commerce, and goods and services tax-related tailwinds.
Management sees packaged foods entering a stronger growth phase, with low category penetration and similar consumer aspirations across metros and smaller towns. It plans to broaden access through affordable formats while expanding premium products such as Nespresso.
The company is focusing on deeper penetration and uptrading within existing categories rather than relying on large-scale entry into new categories. It sees opportunities in confectionery, noodles, coffee, pet food and out-of-home consumption, while rural growth is currently ahead of urban growth.
Quick commerce is supporting impulse purchases, experimentation and premium products. Digital accounts for 55-60% of media spending, while artificial intelligence is being used in forecasting, micro-marketing, rural distribution, freshness and expiry management and routine-process automation.
Steel remains JP Morgan’s preferred theme
JP Morgan’s materials discussions favoured steel over aluminium. The firm said domestic hot-rolled coil prices are at their highest level since mid-2022, while coking-coal tightness appears cyclical.
JSW Group managing director Parth Jindal told JP Morgan that annual group capex is rising to about US6-7billionfromUS2-3 billion earlier, with spending planned across its businesses.
JSW expects demand growth of 9% in steel, 10% in power, 10% in paints, 10% in energy and 18% in autos. Steel net debt is about one times EBITDA after deleveraging and joint ventures.
Jindal said JFE and POSCO partnerships are helping JSW build technology capabilities in auto-grade and electrical steel. The group is also targeting import substitution in electrical steel for transformers.
Its energy business is targeting 30 gigawatts of capacity, while cement capacity is targeted to rise from 40 million tonnes to 60 million tonnes. JSW Infrastructure plans to increase port capacity from about 180 million tonnes to 400 million tonnes over five years.
| Materials stock | JP Morgan rating |
| JSW Steel | ‘Overweight’ |
| Hindalco Industries | ‘Overweight’ |
| Pidilite Industries | ‘Overweight’ |
JP Morgan’s broader preferred list also includes Exide Industries and Aegis Logistics.
Information technology: JP Morgan remains underweight
Information technology is JP Morgan’s only underweight sector.
The firm sees uncertainty in US and European technology demand, tariff-related delays in discretionary projects and growth remaining in the low single digits. Artificial intelligence is also putting pressure on pricing as productivity gains are increasingly passed back to clients.
Cost reductions are being prioritised over new projects, while hiring remains soft and valuations are high relative to growth, according to JP Morgan.
Mid- and small caps: Stronger growth comes with richer valuations
JP Morgan prefers mid- and small-cap stocks over large caps. It said mid- and small-cap profit after tax rose about 40% in the latest quarter, compared with roughly 16% for large caps.
The premium valuation of the segment is also supported by fund flows. Small-cap funds attracted about Rs 35,000 crore and mid-cap funds about Rs 33,000 crore over six months, compared with about Rs 10,000 crore for large-cap funds, according to JP Morgan.
The firm prefers quality and momentum, particularly earnings momentum, while remaining underweight on value.
Foreign flows remain weak as global rates stay important
JP Morgan said foreign ownership of Indian equities has fallen to about 15.8%, a roughly 15-year low, while most global funds remain underweight India.
It estimates underweight positions of 1.2% among global funds, 3.2% among global ex-US funds, 4.1% among Asia ex-Japan funds and 1.6% among emerging-market funds.
The firm said large-cap banks have seen the biggest improvement in tone over the past six to nine months. Higher global bond yields and a stronger US dollar remain key variables for Indian equity valuations and foreign portfolio flows.
What JP Morgan is watching
The research house is tracking the India-US trade deal and tariff trajectory, including the risk of a 100% Russia-linked tariff, along with the India-EU/EFTA and UK free-trade agreements.
It is also watching the second-quarter FY27 earnings season, liquidity conditions, food inflation, the risk of Reserve Bank of India tightening, the South-West monsoon, China’s fifth Plenum, Reserve Bank of India and US Federal Reserve meetings, the festive season, US mid-term elections and wider geopolitical developments.
JP Morgan’s conference view puts financials, private capex and manufacturing at the centre of its India strategy. The investment bank’sstock positioning favours quality, earnings momentum and mid- and small-cap companies, while information technology remains underweight.
Disclaimer: This article is based on JP Morgan’s India Equity Strategy report, including its sector views, company ratings, estimates and management commentary from the JP Morgan India Conference. The views and ratings represent JP Morgan’s assessment at the time of the report and may change with company results, valuations, interest rates, regulatory developments, commodity prices, exchange rates, foreign capital flows and geopolitical conditions. References to future capital expenditure, capacity additions, earnings, margins, demand, exports and market opportunities are based on research estimates or company management commentary and are subject to execution and economic risks. Historical earnings growth, fund flows, asset quality and valuations should not be treated as indicators of future results. The ratings and sector preferences cited in the article are research views and are not guarantees of future share-price performance. The article does not constitute investment advice, a solicitation, an offer to buy or sell securities, or a recommendation to act on any particular research view. Readers should consider their own financial circumstances, investment objectives, risk tolerance and time horizon and seek advice from a qualified financial adviser before making any investment decision.