Long-term investment case for India remains very strong: Kevin Foley, co-head of global investment banking at J.P. Morgan

Oil remains the key near-term risk, though India is better placed than in previous cycles to absorb price volatility, he said. Foley said India’s long-term investment case remains intact despite forieign outflows, valuation concerns and global uncertainty. Edited excerpts.

What is J.P. Morgan’s growth strategy for India, particularly in investment banking?

India is a priority market for us. We are adding to our local team, across product and coverage roles, and we are continuing to grow. The trajectory has been upward, and we expect that to continue. Our ambition for Global Investment Banking is to be number one across markets, products, and regions, including in India.

Why is India such a priority?

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Simply put: 7% GDP growth. India is one of the most compelling long-term growth stories anywhere in the world. It combines economic growth, deepening capital markets, a rapidly expanding corporate sector, and increasing global relevance. The talent – within our team and in India’s entrepreneurship – have been key drivers to us investing in the region for more than 80 years.

After the rally this year, how should investors think about AI valuations now?Valuations are pricing in accelerated growth. Whether those valuations are too high or too low will only be known in hindsight. If the growth comes through, people will not talk about these as peak valuations. If adoption takes longer, then one could argue that valuation multiples were ahead of themselves. The question is not whether AI will deliver on the growth story. It’s not an “if”. It’s a matter of when and how quickly.

How is this AI cycle different from the dot-com boom?

AI has a broader potential impact on society – both in the way we work and the way we live. Companies aren’t just investing in the promise of AI – they’re deploying it to improve productivity, reduce costs and create new revenue streams. People talk about efficiency gains and shorter work weeks. Whether that plays out over a longer period is a separate question, but the potential impact is much bigger. It’s more transformative than the internet. The internet changed the way people consume. It changed how we shop, read newspapers or order food. AI is a broader, durable transformation across industries.

Foreign investors have been sellers in India. What could bring them back?

Long-term investment case for India remains very strong. Foreign capital will always move around depending on global opportunities and valuations. We saw that with China. Its stimulus programme and the valuation gap between markets saw global money move there. But as India’s growth proves sustainable, money should come back. We have already seen foreign outflows decline. The rupee has also had an impact, but those seem to have stabilised.

Were valuations one reason foreign investors held back?

Some other markets are more concentrated in terms of where value creation is coming from. That needs to be factored in when comparing them with India’s broader market. India has seen multiples correct over the past 18 months. Ultimately, markets are efficient in making decisions.

At current levels, do you think India is overvalued?

On a relative basis, India has had a significant correction, while growth prospects remain good.. At the same time, the macro story has not changed. The one uncertainty is the Strait of Hormuz and its impact on oil.

How big a risk is oil for India?

It is a global factor, but global factors have different regional impacts. The impact here is more acute than in other markets because India is one of the world’s largest oil importers. Our view is that India can handle higher oil prices than current levels. Compared to previous cycles, it’s entered this period with stronger fundamentals, larger FX reserves and a more diversified energy import strategy, making it better equipped to absorb volatility. What would be more problematic is an escalation that creates a sustained supply shock.

How do you see appetite for large IPOs in India amid global uncertainty?

Investors are taking an optimistic view that geopolitical issues and the energy situation will be resolved. There has been almost $20 billion of activity across IPOs, follow-ons and other equity raising this year, and we believe activity can increase in the second half. Market volatility may impact timing, but it doesn’t change the long-term investment case for India.