“We think the rate cut, at least in the near term, is a decently high probability, and that should start to transmit to the economy as well,” he said.
The next RBI Monetary Policy Committee (MPC) meeting is scheduled from February 5 to 7.
Mookim remains cautious on the overall market, as predicting the bottom has become increasingly difficult. External factors such as escalating tariff wars and depreciation of emerging market (EM) currencies, including the rupee (INR), could add further pressure.
He expects this uncertainty to persist for at least the next few months across all markets.
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While valuations of Indian indices have started to show some discount relative to global equities, particularly compared to the S&P, a sustained uptrend is unlikely until macroeconomic issues stabilise.
JPMorgan does not expect a rapid recovery in Indian markets and urges patience through at least the first half of the year. While there is hope that the broader market, particularly mid-caps, will not decline further—thus avoiding potential liquidity issues—downside risks remain due to macroeconomic uncertainties.
JPMorgan has revised its sectoral stance, upgrading consumer discretionary stocks excluding four-wheelers, and downgrading capital expenditure (capex) allocations to neutral.
Within the auto sector, JPMorgan favours two-wheelers over four-wheelers, as consumers having extra disposable income will likely boost discretionary spending.
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For the full interview, watch the accompanying video
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