JM Financial’s Head of Research Deepak Gupta expects export-focused sectors like capital goods and chemicals to lead the next market recovery. He believes improved corporate margins and global competitiveness will bring foreign investors back to India over the next four quarters.
Indian manufacturing companies are shifting their focus toward global markets, a trend that may define the next phase of stock market growth. According to Deepak Gupta, Head of Research and Senior Fund Manager at JM Financial Asset Management, industries such as capital goods, auto ancillaries, textiles, and chemicals are becoming increasingly competitive. This shift toward export-led expansion is supported by operational efficiency and a favorable currency environment, which helps these firms grab a larger piece of international trade.
Foreign investors, known as FIIs, have been net sellers in recent months. This happened largely because global capital shifted toward investments in artificial intelligence infrastructure. However, Gupta suggests this is likely a temporary pause. For this capital to return, Indian firms must demonstrate consistent profit margins over the next two to four quarters. Earnings quality is currently the most important test for global investors, especially when they have many other options, such as new stock market listings, to consider.
While the outlook for exports is positive, the market still faces challenges. Global geopolitical tensions and shifting tariff policies in major trade partners remain a significant risk for export-heavy companies. If international trade rules change, it could create hurdles for Indian manufacturers. Investors should monitor whether these companies can protect their profit margins in a competitive global market, as rising costs or falling demand could hurt financial performance.
On the macroeconomic front, expectations for interest rates are relatively stable. Analysts anticipate that the Reserve Bank of India will manage the interest rate cycle cautiously. Since inflation is currently within manageable limits, there is room for the central bank to support industrial growth without needing aggressive rate hikes. This stability is helpful for capital-intensive sectors that rely on borrowing to fund their growth.
JM Financial itself is navigating this environment with a focus on valuation discipline. In its recent performance update for the first quarter ending June 2026, the firm reported a 13% increase in net revenue to INR 883 crore. While the firm remains selective about financial services, it sees structural supply-demand benefits in the healthcare sector. Conversely, the insurance space remains a wait-and-watch area due to pending regulatory updates.
For investors, the key monitorable in the coming quarters will be the consistency of earnings. Whether companies can sustain their profit margins while expanding exports will determine if the current optimism translates into long-term growth. Investors may track upcoming quarterly results for signs of sustained margin protection and successful export order execution.