Positive returns for Indian equities over next 12 months: JPMorgan
What's the story
JPMorgan's Rajiv Batra, Head of Asia and Co-Head of Global Emerging Markets Equity Strategy, has predicted positive returns for Indian equities in the next 12 months. However, he also believes that North Asia will continue to outperform due to stronger earnings growth from artificial intelligence (AI) and semiconductor investments. Batra expects India's earnings growth at 10-11%, in line with current consensus estimates.
Future projections
Batra sees easing selling pressure in India
Batra said stable oil prices, commodity costs, and monetary policy could support a 15-16% earnings growth in FY28.
This could pave the way for high-ten market returns over the next year.
He also noted that selling pressure in India may be easing as foreign ownership has dropped from around 18-19% to nearly 14.5%, with midcap and smallcap stocks now seeing an uptick.
Market outlook
Technology stock correction viewed as opportunity
Batra views the recent correction in technology stocks across Korea and Taiwan as an opportunity, not a long-term trend change.
He said the selloff was led by derating and not by earnings downgrades.
However, he added that upcoming guidance from hyperscalers on AI capital expenditure will determine whether spending remains on track with estimates of $870 billion in 2026 and over $1 trillion in 2027.
Regional focus
JPMorgan's regional outlook
JPMorgan remains bullish on Korea, Taiwan, and China, while taking a neutral and selective approach to India and ASEAN markets.
Batra cited stronger AI-driven earnings visibility in North Asia but warned that South Asian economies could face challenges from rising US interest rates, a stronger dollar, and potential El Nino impact later this year.