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JM Financial Maintains Underweight on IT and Favours NBFCs
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CNBC TV18•12-10-2026, 13:10
JM Financial Maintains Underweight on IT and Favours NBFCs
- •JM Financial maintains a structural underweight stance of nearly 200 basis points on the IT sector due to GCC growth pressures and AI overhang.
- •The brokerage expects a subdued second quarter for the BFSI space, with incremental profit contributions projected at only 28%.
- •The model portfolio is overweight on NBFCs and underweight on banks by about 400 basis points, driven by strong projected growth for NBFCs.
- •Preferred NBFC picks include AB Capital, Cholamandalam Finance, and PNB Housing Finance, while Axis Bank is a top preference among private lenders.
- •Domestic focus remains strong on data center expansion and AI infrastructure supported by government tax incentives and robust order backlogs.
Key Questions Answered
JM Financial maintains an underweight position on IT due to ongoing pressures from Global Capability Centers expanding in India and uncertainties surrounding the AI overhang, which keeps the medium-term outlook negative despite brief relief rallies.
JM Financial estimates NBFC growth at around 36% for the quarter, sharply outpacing the anticipated 11% growth for private sector banks and 1% for public sector banks.
The negative impact of the RBI's 25-basis-point rate hike and shift to a tightening cycle is expected to flow through to NBFCs in financial year 2028 rather than the current financial year 2027.
