JP Morgan maintains its 27,000 Nifty 50 target, noting an improved earnings outlook for the Indian equity market. The first quarter of FY27 saw strong results, with MSCI India PAT up 16% YoY, supported by resilient domestic demand.
The Indian equity market’s earnings outlook has improved, with JP Morgan retaining its 27,000 target for the Nifty 50 and estimating MSCI India earnings growth of 11 per cent and 13 per cent in CY26 and CY27, respectively, according to its latest report.
JP Morgan said the FY27 earnings season started on a stronger-than-expected note, with revenue of MSCI India companies growing 19 per cent year-on-year and profit after tax (PAT) rising 16 per cent YoY in the first quarter. It said, “Our preferred positioning leans heavily towards high growth domestic cyclicals. Our base/bull/bear case Nifty-50 targets remain 27,000/30,000/20,500 respectively”
Mid- and Small-Caps Show Stronger Growth
The report added that performance was stronger among mid- and small-cap companies. PAT for the Nifty Midcap 100 (ex-Energy) companies rose 42 per cent YoY, while PAT for Nifty Smallcap 100 companies increased 39 per cent YoY.
Resilient Domestic Demand Supports Broad Growth
For MSCI India, earnings beats accounted for 58 per cent, while misses stood at 24 per cent, according to the report. JP Morgan also highlighted a broader spread of earnings growth across sectors during the quarter.
The report said resilient domestic demand remained an important support for companies despite a difficult external environment. “Resilient domestic demand continued to offset an unusually noisy external environment,” JPMorgan said, highlighting the dominant theme in management commentary during the first quarter of FY27.
Key Sectors Show Underlying Strength
Among MSCI India sectors, Materials, Utilities, Industrials and Discretionary reported high earnings growth during the quarter. JP Morgan said several areas showed strong underlying trends despite the overall profitability picture being affected by a few large companies. It identified power demand, capital expenditure and the grid cycle, the defence cycle, autos and consumer staples as key areas of strength. Power demand reached a record peak of around 271GW, while the auto sector benefited from volume growth and rising exports. Consumer staples also showed a volume-led recovery.
Companies Maintain Cautious Guidance
The report said companies largely maintained a cautious approach despite the strong first quarter. Management commentary pointed towards profitable expansion rather than pursuing volume growth at any cost. Companies also focused on calibrated pricing and maintaining margin discipline.
Most companies maintained, rather than raised, their full-year guidance amid geopolitical and monsoon-related uncertainty. The brokerage’s outlook therefore remains supported by stronger earnings growth, resilient domestic demand and improving performance across several sectors, while geopolitical and monsoon-related uncertainties remain key factors to watch. (ANI)
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