JM Financial Institution’s latest research note, released Thursday, keeps the IT sector underweight at almost 200 basis points below the Nifty benchmark, even as Tata Consultancy Services’ Q4 results nudged the index higher.
Venkatesh Balasubramaniam, MD and Head of Research at JM Financial, warned that the two headwinds—slow growth in large‑cap IT due to GCC office expansions and an AI overhang—continue to keep the medium‑term outlook negative.
In contrast, the brokerage lifts its stance on NBFCs, projecting a 36% incremental profit after tax in Q4, compared with just 11% for private banks and 1% for public banks, and overweight NBFCs by about 400 basis points.
The firm cites 20% growth in assets under management, 3% return on assets, and 15% profit growth as key drivers for the NBFC upside, and names AB Capital, Cholamandalam Finance and PNB Housing Finance as top picks.
The RBI’s recent 25‑basis‑point rate hike and shift to a tightening cycle is expected to impact NBFCs only in FY 2028, according to the note, leaving the current year largely insulated.
On the capital goods side, the research notes that the data‑center build‑out in India, buoyed by tax incentives introduced 1.5 years ago, remains a structural play, with strong order backlogs and expected robust quarterly results.