Economic fundamentals in India have worsened over the past months but brokerage firm JP Morgan is still "positive" on the Indian stock markets.

The economic fundamentals have deteriorated over the recent past due to a number of factors, including the government's inability to move ahead with reforms, poor monsoon and increase in crude prices.

The first stream of reforms was expected to be released after the presidential poll in July this year. But, the coalition government could not announce reforms because of resistance from allies. The opposition stalled the ongoing monsoon session after the CAG report revealed huge loss to the taxpayers due to coal block allocations scam.

Nevertheless, the American brokerage firm said, "We are positive on the domestic market going into H2 and remain constructive over the medium term."

But, the brokerage firm advocated exploring hedging strategies to fence in upsides and prevent downsides over the near future. It added that it maintained its overweight call on India. it also said that India stock bulls are getting edgy.

After falling more than 25 per cent in 2011, both the SENSEX and Nifty have gained more than 16 per cent so far this year.