Large‑cap earnings growth lags at 10‑11% as UPI MDR rolls out, according to SBI Mutual Fund research.
UPI MDR, a merchant discount rate on Unified Payments Interface transactions, is projected to lift banks' profitability, but the exact magnitude depends on implementation details.
The research notes concerns that merchants might shift to cash or split transaction values, potentially diluting the benefit.
SBI Mutual Fund currently favors mid‑ and small‑cap names, citing muted large‑cap growth and outflows from foreign and domestic investors.
IT sector valuations hover at 15‑16× earnings, prompting a wait‑and‑watch stance despite AI spending upticks.
Capital is moving toward pharma contract manufacturing and auto ancillaries expanding into aerospace, defence and railways, offering broader growth. SBI Mutual Fund will reassess in Q3 as UPI MDR implementation details emerge.