India equities well-positioned, but returns to moderate; Nifty target at 26,500: Sanjay Mookim – News Air Insight

Sanjay Mookim, Head of Research at JPMorgan, believes India’s equity market remains a strong long-term bet despite global headwinds, subdued economic growth, and foreign outflows. Speaking to ET Now, Mookim outlined his outlook on sector allocations, secondary market flows, and Nifty’s potential trajectory for the current fiscal.

Moderate growth, reasonable returns

Mookim cautioned investors to temper expectations, highlighting that nominal GDP growth has slowed from over 20% in FY23 to around 8% currently, with only a gradual pickup expected over the next few years. “If I make 9% in equities in an index ETF, I should be happy with it. It is a good return,” he said, noting that high double-digit compounding returns may not be realistic over the next three years.

For short-term investors, he added, returns will depend less on growth and more on earnings surprises, which remain difficult to foresee given the current economic backdrop.

Sector preferences: Financials, consumption, real estate, power, defence

On sector allocation, Mookim expressed confidence in financials and consumer discretionary, citing attractive valuations compared to global peers. He also highlighted opportunities in real estate, power, and defence stocks, describing them as idiosyncratic plays with long-term growth potential.

“Financials and consumer names make the most sense as core holdings. Beyond that, real estate and power remain promising areas,” he said.

IPOs absorbing liquidity, secondary market still relevant

Addressing concerns that IPOs and block deals were absorbing market liquidity, Mookim argued that this was part of the equity market’s natural function. “The function of the equity market is to take savings and provide it to corporates who will use those savings to grow assets. As long as there is supply of money, there will be demand,” he said.He also dismissed the idea of focusing too much on FII flow data. “On a daily basis, net flows are zero. Markets move based on the impulse of the buyer or seller. We cannot invest on anticipation of flows but must focus on fundamentals,” he added.

Broader coverage, deeper market participation

Mookim emphasized how India’s equity market has structurally deepened in recent years. Trading volumes have expanded from $3 billion a day in 2019 to $12 billion today, with more than 200 stocks in the F&O segment. JPMorgan itself has expanded coverage from 130 stocks to nearly 190, reflecting growing investor demand.

“India will always be a stock picker’s market. Liquidity and interest are far more robust now compared to five years ago,” he said.

Nifty target and outlook

JPMorgan has set its Nifty target at 26,500 for the next 6-12 months, reflecting optimism despite short-term volatility. “Logically, markets should go up every year,” Mookim said, adding that near-term catalysts such as the India-US trade discussions could provide additional triggers.

While he acknowledged volatility and global uncertainties, Mookim reiterated that India’s relative valuations and structural growth drivers make it one of the few large economies with visible long-term growth.