Name: India Keeps Rates Steady: What It Means for Markets
Uploaded: 2026-02-06T23:37:52+00:00
Duration: 835 s

Speakers

Sanjay Mookim — Head of India Equity Research, JPMorgan

Summary

The RBI kept India's key rate unchanged at 5.25%, and Sanjay Mookim of JPMorgan said the pause is reasonable with a focus on liquidity. He sees the U.S.-India trade deal as a confidence boost that may ease near-term rupee pressures but not change GDP or earnings forecasts. Indian equities are fairly valued with about 12% earnings growth, though global flows prefer North Asia tech and memory. He favors financials, autos, textiles, and small/midcaps, while avoiding Indian IT due to AI disruption risk.

RBI holds key rate at 5.25%; Sanjay sees pause and liquidity management as key.
U.S.-India trade deal lifts confidence and may ease rupee pressure near term.
India equities look fairly valued with 12%-13% earnings growth but face competition from North Asia tech/memory.
AI disruption is a real risk to Indian IT and could spill into real estate, consumption, and growth.
Trade deals support Indian textiles and labor-intensive exporters if tariffs remain favorable.
Small/midcaps are seen as better than Nifty 50 for material EPS impact from trade deals.
Financials and autos are favored; consumer improving but competitive.
European car imports seen as limited threat to Indian autos.

Ideas

Sanjay Mookim Head of India Equity Research, JPMorgan 1:41

Trade deal eases near-term rupee pressure.

The U.S.-India trade deal improves confidence and helps break the negative circularity in currency markets where the rupee was expected to depreciate. While the deal does not change his 12-month GDP or earnings outlook, it should ease near-term currency pressures and give the RBI more room to maintain liquidity surpluses.

Sanjay Mookim Head of India Equity Research, JPMorgan 3:21

India fairly valued; flows face competition.

India has a decent growth outlook with 9%-10% nominal GDP growth and 12%-13% earnings growth over the next 12 months, and the index looks fairly valued. Equities can still make sense on an absolute basis if investors are comfortable with around 12% returns over three years, but global fund managers have more exciting tech/memory opportunities elsewhere, so it may be difficult for India to attract flows in the near term.

Sanjay Mookim Head of India Equity Research, JPMorgan 3:47

North Asia tech offers better dollar returns.

The global tech cycle is robust and the memory cycle is on an upswing, and North Asian markets are trading higher than India. This means global fund managers can find better dollar returns in North Asia tech/memory, drawing flows away from India.

Sanjay Mookim Head of India Equity Research, JPMorgan 6:07

Indian IT faces unresolved AI disruption.

AI is a real threat to Indian IT and potentially the broader economy. If IT hiring or net jobs decline, it could hurt real estate, consumption, and economic growth. Current ancillary data like commercial rentals and services are okay and GCCs are hiring, but the risk is unresolved and he sees no price at which he can advocate Indian IT until the business is secure for the next three to five years.

Sanjay Mookim Head of India Equity Research, JPMorgan 9:02

Indian textile exporters gain tariff advantage.

The U.S./EU trade deals and lower Indian tariffs versus Southeast Asia give Indian textile and labor-intensive exporters a significant global export advantage. If global tariffs stay as they are for three to five years, these smaller industries should gain market share in export markets.

Sanjay Mookim Head of India Equity Research, JPMorgan 9:48

Nifty 50 sees no near-term EPS lift.

The trade deal and budget boost confidence in India's three-to-five-year economic outlook, but they do not change near-term EPS for the Nifty 50 or large-cap consumer names. He keeps his 12% EPS growth projection, so large caps are not the main way to play the trade deal.

Sanjay Mookim Head of India Equity Research, JPMorgan 11:24

Indian financials offer improving momentum.

Financials are one of the two segments where business momentum is improving and companies could surprise. The regulator intends to drive growth in the system, so financial outcomes should improve; he cites research on large Indian banks over the next three years. He continues to like financials.

Sanjay Mookim Head of India Equity Research, JPMorgan 11:50

Consumer improving but competition demands selectivity.

Consumption is finding its feet, inflation is down, disposable income is improving, and discretionary consumption is starting to look better. However, intense competition means not every consumer company will benefit, so investors need a bottom-up approach to find companies with fewer competitive issues and better margin resilience.

Sanjay Mookim Head of India Equity Research, JPMorgan 12:37

Indian autos best consumer play.

Within the improving consumer segment, autos screen best because they have fewer competitive issues and can maintain margins better. He is not worried about European car imports disrupting Indian auto sales because imported cars have a small demand footprint in India and foreign manufacturers must adapt to local tastes.

India Keeps Rates Steady: What It Means for Markets

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