JPMorgan and HSBC have downgraded Indian equities, citing high valuations, earnings risks, and limited exposure to new-age sectors like AI and semiconductors.
Rising crude oil prices and geopolitical tensions could hit corporate earnings, with a 20% oil spike potentially shaving 150 bps off profits.
Despite record FPI outflows, strong domestic inflows have cushioned markets, even as the rupee weakens and growth expectations moderate.
In less than a day, yet another broking giant has downgraded Indian equities. Investment bank JPMorgan has cut its rating on Indian equities to ‘neutral’ from ‘overweight’ and lowered its price targets for the Nifty 50 across scenarios, reports said.
The downgrade follows HSBC’s move to cut India to ‘underweight’ from ‘neutral’ on Thursday — its second downgrade in less than a month.
1 April 2026
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For the Nifty 50, JPMorgan has reduced its bull-case target to 30,000 from 33,000 earlier. The base-case target has been lowered to 27,000 from 30,000, while the bear-case target now stands at 20,500, down from 24,000.
The brokerage cited elevated valuations relative to emerging market peers, earnings risks, dilution concerns, and limited exposure to next-generation technologies as key reasons for the downgrade.
Amid rising geopolitical uncertainty and elevated crude oil prices, several sectors are expected to be impacted.
According to HSBC, a 20% rise in crude prices could shave nearly 150 basis points off corporate earnings. JPMorgan has cut its FY27 earnings growth estimate by 2 percentage points to 10% across key sectors. It has also lowered MSCI India EPS growth estimates for 2026 and 2027 to 11% and 13%, respectively.
“India's premium to MSCI EM has compressed to 65% from its peak of 109%, reflecting some re-rating, but peers like Korea, Brazil, and China still offer cheaper entry points for similar or better forward growth,” Rajiv Batra, Head of Asia and Co-Head of Global Emerging Markets Equity Strategy at JPMorgan, said in a note.
Domestic Flows Cushion FPI Exodus
Batra noted that strong domestic inflows have cushioned the sharp outflow of foreign portfolio investors (FPIs). FPIs have offloaded a record $37 billion, while domestic channels — including IPOs and qualified institutional placements (QIPs) — have seen inflows of $64 billion.
Taiwan Gets an Upgrade
JPMorgan upgraded Taiwan to ‘overweight’ and raised its targets for the benchmark TAIEX index. In contrast, India’s large-cap index has limited exposure to AI, data centres, and semiconductors compared with markets such as the US, South Korea, China, and Taiwan.
“Overall, we see better opportunities elsewhere in emerging markets until valuations de-rate further or earnings visibility improves,” JPMorgan said.
Why Foreign Brokerages Are Turning Cautious on India
HSBC noted that despite a recent correction, Indian equities could appear expensive again as earnings downgrades come through.
The rapid depreciation of the rupee has also unsettled investors, prompting outflows from Indian markets. The rupee has fallen 10% against the dollar so far this year and was the worst-performing Asian currency in 2025.
Ongoing geopolitical tensions in West Asia and elevated crude prices are expected to further pressure the currency and widen India’s current account deficit.
While broader macroeconomic fundamentals remain resilient, inflation risks persist, and growth is expected to moderate as global spillovers from the conflict intensify. India’s inflation is projected to average 4.6% in 2026–27, according to the RBI’s Monetary Policy Committee.
India was on track for near 8% growth during its ‘Goldilocks’ phase, but the conflict has dimmed the outlook. Growth is now expected to slow to 6.8–7% in the coming quarters before picking up towards the end of FY27.
