Jakarta. BRI Danareksa Sekuritas sees Indonesia’s stock market remaining in “catch-up mode” after the Jakarta Composite Index (JCI) posted a third straight weekly gain as a weaker rupiah and delayed macroeconomic pressures cloud the outlook.

The Indonesia Stock Exchange (IDX) benchmark rose 0.64% in the week through July 31 to 6,236, extending its July advance to 10.5%. However, the gains were concentrated in large-cap banks during the final two trading sessions, while market breadth weakened and trading value and volume declined sharply, BRI Danareksa said in a research note.

The rupiah also remained near Rp18,000 per dollar, adding to concerns over the durability of the equity rally.

“We view the market as still in catch-up mode, not yet in a durable re-rating,” the brokerage said.

The JCI had fallen for three consecutive sessions to an intraweek low of 6,029 on July 29, coinciding with the Federal Reserve’s policy decision and coming two sessions after the surprise resignation of Bank Indonesia Governor Perry Warjiyo. The index then rebounded 1.6% on Thursday and another 0.8% on Friday.

The rupiah weakened about 0.3% over the week to Rp18,000 per dollar after touching Rp18,110.

Banks drive late rally
The weekly gains were led by major banks, with Bank Rakyat Indonesia (BBRI), Bank Mandiri (BMRI), Bank Central Asia (BBCA) and Bank Negara Indonesia (BBNI) contributing about 21 points, or 54%, of the JCI’s roughly 40-point increase.

BBRI rose 2.7%, BMRI gained 1.5%, BBCA advanced 0.8%, and BBNI increased 0.3%.

BRI Danareksa said the move largely reversed the banks’ drag in the previous week, but the flow pattern pointed more toward positioning adjustments than fresh accumulation.

Foreign buying was also less robust than the headline figures suggested. Investors recorded Rp7.1 trillion of net buying across Indonesian markets during July 27-31, reversing a Rp3.37 trillion net sell the previous week.

However, the figure was inflated by a Rp9.32 trillion negotiated-market transaction related to the retailer Mitra Adiperkasa (MAPI) tender settlement. Excluding that transaction, foreigners were net sellers of about Rp2 trillion, according to BRI Danareksa.

Foreign investors also sold Rp250.6 billion on Friday, taking cumulative net selling for 2026 to Rp72.99 trillion.

Macro pressures may emerge in 2H

The brokerage said first-half earnings were broadly in line with expectations, with most sectors delivering positive growth. Metals, banks, selected retailers, upstream oil and gas services, and hospitals were among the strongest performers.

But BRI Danareksa cautioned that the results did not yet fully reflect the impact of the macroeconomic shock associated with the war and higher domestic rates.

Bank net interest margins were under pressure, while asset quality among retail, small and medium-sized enterprise and micro borrowers had begun to soften. Consumer companies also faced rising distribution and operating costs, while poultry margins deteriorated sharply in the second quarter.

The brokerage said the impact of Bank Indonesia’s rate hikes in May and June, together with the June adjustment in Pertamax fuel prices, had only limited effects on first-half results because they came late in the reporting period.

Those pressures could become more visible in the second half, particularly through weaker household spending, softer loan demand, higher funding and transportation costs and further deterioration in asset quality.

“We expect the pressure on household spending, loan demand, funding costs, transport expenses and asset quality to become more visible in the second half of 2026,” BRI Danareksa said.

The brokerage therefore favors companies with pricing power, exposure to external demand, structural growth or strong company-specific execution.

BI succession adds uncertainty
The unexpected resignation of Warjiyo has introduced another source of uncertainty just as investors are closely watching the rupiah, oil prices, US Treasury yields and the Indonesian government bond curve.

Acting Governor Destry Damayanti has signaled continuity in the central bank’s focus on rupiah stability and inflation control. Investors will now watch the government’s nominee to parliament, the fit-and-proper process and whether the eventual appointment strengthens Bank Indonesia’s independence and policy credibility.

The bond market has meanwhile provided a contrast to equities. Bank Indonesia estimates that 100 basis points of rate increases since the end of May have attracted Rp195 trillion, or about $10.7 billion, into government bonds and Bank Indonesia Rupiah Securities, according to BRI Danareksa.

JCI target remains 7,200
BRI Danareksa maintained its end-2026 JCI target of 7,200, implying about 15.5% upside from the latest level.

The brokerage expects the market’s performance in the second half to increasingly reflect an improving fiscal outlook and earnings prospects, alongside its thesis that Indonesia’s equity risk premium will decline.

Investors will next focus on July inflation data, second-quarter gross domestic product, signals on the nomination of a new BI governor, approvals for revised mining work plans and budgets, and the remaining first-half earnings reports.

Externally, oil prices, the war in the Middle East and the possibility of renewed US-Japan foreign-exchange intervention remain key variables for the rupiah and broader risk appetite, BRI Danareksa said.

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