JM Financial Bets on Banks, Defence, and Infra
ECONOMY & POLICY

JM Financial Bets on Banks, Defence, and Infra

JM Financial has unveiled its India Model Portfolio with a strategic overweight on sectors such as banking, real estate, telecom, infrastructure, and defence, while maintaining an underweight position on internet platforms, utilities, cement, pharmaceuticals, and consumer staples. The brokerage described this sectoral positioning as part of a broader thematic view influenced by improving macroeconomic indicators, a more growth-oriented Reserve Bank of India (RBI), and valuation divergences across market capitalisations.

JM Financial's portfolio reflects a +119 basis points (bps) overweight on banks, with key picks including ICICI Bank, Axis Bank, HDFC Bank, SBI, and DCB Bank. It has also taken an overweight position in real estate, REITs and hotels (+85 bps), telecom (+69 bps, led by Bharti Airtel), infrastructure (+52 bps via L&T), defence (+49 bps with BEL), oil & gas (+37 bps with RIL), NBFCs and AMCs (+28 bps including Bajaj Finance, Shriram Finance, and Nuvama Wealth), insurance (+24 bps featuring HDFC Life and ICICI Lombard), and metals (+23 bps with Hindalco, JSPL, and Tata Steel).

The brokerage remains neutral on IT services and automobile stocks, while significantly underweight on internet businesses (-198 bps), utilities (-106 bps despite a preference for NTPC and JSW Energy), cement (-96 bps, favouring Ultratech), pharmaceuticals (-44 bps, with a tilt towards hospitals and contract development and manufacturing organisations), and consumer staples (-44 bps, although names like Titan, Havells, Varun Beverages, and Britannia are favoured).

The brokerage’s outlook is anchored in a shift in RBI policy under the new Governor, Malhotra, who appears more focused on growth than inflation, contrasting the approach of his predecessor, Shaktikanta Das. JM Financial expects the RBI to cut rates by up to 50 basis points in this cycle due to manageable inflation levels.

The report also points to a revival in capital expenditure post-elections, supported by the Union government’s allocation of Rs 11.2 trillion (approximately £106 billion) for FY26. Rural consumption is on a recovery path aided by a low base and favourable monsoon outlook, although urban demand shows some signs of moderation.

Despite these tailwinds, the brokerage remains cautious on valuations. All major indices—large-cap, mid-cap, and small-cap—are trading at least one standard deviation above their historical averages. In absolute FY26 P/E terms, large caps (Nifty50 at 20.6x) are cheapest, followed by small caps (25.2x) and midcaps (29.3x). However, on a PEG basis, midcaps appear most attractive (1.3x), ahead of small caps (1.7x) and large caps (1.9x).

JM Financial also flagged the continuation of the earnings downgrade cycle. Although Nifty50 EPS estimates for FY25 rose marginally by 0.3 per cent in April, estimates for FY26 and FY27 were trimmed by 1.1 per cent and 1.0 per cent, respectively—marking steeper cuts than those in February and March.

JM Financial’s model portfolio reflects cautious optimism, with a tilt towards cyclical and rate-sensitive sectors in anticipation of a capex-driven recovery and dovish monetary stance. However, concerns over valuation and earnings cuts prompt a more selective stance—especially in high-growth but overvalued sectors like internet and utilities. The brokerage advises investors to maintain balanced exposure across market caps while staying alert to relative growth metrics and sector fundamentals.

Image source:www.jmfinancialservices.in

JM Financial has unveiled its India Model Portfolio with a strategic overweight on sectors such as banking, real estate, telecom, infrastructure, and defence, while maintaining an underweight position on internet platforms, utilities, cement, pharmaceuticals, and consumer staples. The brokerage described this sectoral positioning as part of a broader thematic view influenced by improving macroeconomic indicators, a more growth-oriented Reserve Bank of India (RBI), and valuation divergences across market capitalisations.JM Financial's portfolio reflects a +119 basis points (bps) overweight on banks, with key picks including ICICI Bank, Axis Bank, HDFC Bank, SBI, and DCB Bank. It has also taken an overweight position in real estate, REITs and hotels (+85 bps), telecom (+69 bps, led by Bharti Airtel), infrastructure (+52 bps via L&T), defence (+49 bps with BEL), oil & gas (+37 bps with RIL), NBFCs and AMCs (+28 bps including Bajaj Finance, Shriram Finance, and Nuvama Wealth), insurance (+24 bps featuring HDFC Life and ICICI Lombard), and metals (+23 bps with Hindalco, JSPL, and Tata Steel).The brokerage remains neutral on IT services and automobile stocks, while significantly underweight on internet businesses (-198 bps), utilities (-106 bps despite a preference for NTPC and JSW Energy), cement (-96 bps, favouring Ultratech), pharmaceuticals (-44 bps, with a tilt towards hospitals and contract development and manufacturing organisations), and consumer staples (-44 bps, although names like Titan, Havells, Varun Beverages, and Britannia are favoured).The brokerage’s outlook is anchored in a shift in RBI policy under the new Governor, Malhotra, who appears more focused on growth than inflation, contrasting the approach of his predecessor, Shaktikanta Das. JM Financial expects the RBI to cut rates by up to 50 basis points in this cycle due to manageable inflation levels.The report also points to a revival in capital expenditure post-elections, supported by the Union government’s allocation of Rs 11.2 trillion (approximately £106 billion) for FY26. Rural consumption is on a recovery path aided by a low base and favourable monsoon outlook, although urban demand shows some signs of moderation.Despite these tailwinds, the brokerage remains cautious on valuations. All major indices—large-cap, mid-cap, and small-cap—are trading at least one standard deviation above their historical averages. In absolute FY26 P/E terms, large caps (Nifty50 at 20.6x) are cheapest, followed by small caps (25.2x) and midcaps (29.3x). However, on a PEG basis, midcaps appear most attractive (1.3x), ahead of small caps (1.7x) and large caps (1.9x).JM Financial also flagged the continuation of the earnings downgrade cycle. Although Nifty50 EPS estimates for FY25 rose marginally by 0.3 per cent in April, estimates for FY26 and FY27 were trimmed by 1.1 per cent and 1.0 per cent, respectively—marking steeper cuts than those in February and March.JM Financial’s model portfolio reflects cautious optimism, with a tilt towards cyclical and rate-sensitive sectors in anticipation of a capex-driven recovery and dovish monetary stance. However, concerns over valuation and earnings cuts prompt a more selective stance—especially in high-growth but overvalued sectors like internet and utilities. The brokerage advises investors to maintain balanced exposure across market caps while staying alert to relative growth metrics and sector fundamentals.Image source:www.jmfinancialservices.in

Next Story
Infrastructure Urban

Reliance, Diehl Advance Pact for Precision-Guided Munitions

Diehl Defence CEO Helmut Rauch and Reliance Group’s Founder Chairman Anil D. Ambani have held discussions to advance their ongoing strategic partnership focused on Guided and Terminally Guided Munitions (TGM), under a cooperation agreement originally signed in 2019.This collaboration underscores Diehl Defence’s long-term commitment to the Indian market and its support for the Indian Government’s Make in India initiative. The partnership’s current emphasis is on the urgent supply of the Vulcano 155mm Precision Guided Munition system to the Indian Armed Forces.Simultaneously, the “Vulc..

Next Story
Infrastructure Urban

Modis Navnirman to Migrate to Main Board, Merge Subsidiary

Modis Navnirman Limited has announced that its Board of Directors has approved a key strategic initiative involving migration from the BSE SME platform to the Main Board of both BSE and NSE, alongside a merger with its wholly owned subsidiary, Shree Modis Navnirman Private Limited.The move to the main boards marks a major milestone in the company’s growth trajectory, reflecting its consistent financial performance, robust corporate governance, and long-term commitment to value creation. This transition will grant the company access to a broader investor base, improve market participation, en..

Next Story
Infrastructure Urban

Global Capital Flows Remain Subdued, EMEA Leads in Q1 2025

The Bharat InvITs Association’s industry update for Q1 2025 shows subdued global capital flows, with investment volumes remaining at the lower end of the five-year range despite a late 2024 recovery. According to data from Colliers and MSCI Real Capital Analytics, activity in North America declined slightly, while EMEA maintained steady levels and emerged as the top region for investment in standing assets.The EMEA region now hosts seven of the top ten cross-border capital destinations for standing assets, pushing the United States’ share of global activity below 15 per cent. Meanwhile, in..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?