Markets Were Driven By Q2 Surprises, Not Absolutes, Says JPMorgan’s Sanjay Mookim

As the earnings season nears its end, Sanjay Mookim, Head of India Equity Research at JPMorgan, believes the September quarter delivered a much-needed respite for markets, with earnings largely neutral to better than expected after a string of disappointments earlier in the year.

“What drove stock prices this quarter were the surprises rather than absolutes,” he told NDTV Profit, adding that expectations had been reset lower in the March and June quarters when company commentary was weak.

According to Mookim earnings projections were adjusted, and the September quarter turned out to be a decent one, helped partly by policy actions.

He further added that banks have continued to perform well, while consumer companies have “shown some life after a while”. Auto companies too reported strong sales numbers, though he cautioned that the key question remains around the sustainability of growth.

He observed that commentary from managements has improved compared to the more despondent tone earlier this year. This shift, combined with stabilising demand trends, has started to feed into some positive earnings revisions from the bottom up.

While talking about earnings as a selection criterion he said that for bottom-up investors, the first criterion is the potential of companies to beat expectations. Valuation filters rank lower. However, if you are a long-term investor, you need to consider future compounding and the level of entry.

Discussing the potential impact of trade deals, Mookim said that if there is a global drawdown, that will create pressure on the Indian markets. On the other hand, if there is any progress on trade deals, sentiment could turn positive.

Over the next two months, he expects attention to shift away from corporate commentary toward macro factors such as trade deals and potential rate cuts by the Reserve Bank of India.

Discussing policy effects, Mookim pointed to the impact of tax cuts and lower net prices on consumer sentiment. “Consumer confidence surveys showed a pick-up," he noted. According to him even before the GST cuts, urban discretionary items were showing growth. He said they were looking for sectors where price cuts could drive volume elasticity. He also highlighted autos as a strong candidate. “We continue to see the volume play there, though company strategy also matters.”

On real estate, Mookim acknowledged that some micro-markets still face oversupply concerns but sees promise in the improving sales momentum. “The market is not fully appreciating that we’ve moved from a high-price, speculative cycle to a capital-choked model — where you build, sell, collect money, and move on. It’s no longer about price stagnation,” he said.

He also underscored the importance of foreign investor flows in large-cap performance. Foreign institutional investors still dominate large-cap ownership, so inflows and outflows matter for index performance. However, he pointed that it’s not automatic that money will flow to India just because of global AI-led growth. The trigger, according to him, lies in India’s relative growth advantage.