JP Morgan has downgraded India's stock market outlook to neutral, citing elevated valuations compared to emerging market peers and potential earnings risks. The brokerage set a target of 27,000 for the Nifty index by 2026, indicating a possible upside of 13% from its recent close of 23,897.95. This downgrade follows a similar move by HSBC, which lowered India's rating to underweight due to inflationary pressures driven by high oil prices and demand challenges that could hinder earnings growth. JP Morgan noted that India's historical 'scarcity premium' is under threat due to growth concerns persisting over the last eight quarters. Despite a narrowing valuation gap with the MSCI Emerging Markets index to 65%, Indian stocks continue to trade at a significant premium compared to countries like Korea, Brazil, China, Mexico, and South Africa, which present more attractive investment opportunities with similar or better forward earnings growth.