JPMorgan warns India earnings optimism overdone as stocks falter

The earnings optimism surrounding India’s domestic-focused companies may be misplaced as the economy will take longer to recover from a Covid-fuelled slump, according to JPMorgan Chase & Co.

Firms with a heavy reliance on local demand may face a slew of profit downgrades this year due to subdued consumption and wage growth, said Sanjay Mookim, JPMorgan’s head of research, India.

The warning comes as sell-side analysts estimate overall earnings per share for companies in the benchmark NSE Nifty50 Index to rise almost 17 per cent over the next 12 months.

Earnings disappointment would pose another threat to stocks, which have already seen fortunes