The bank uprated Indonesian shares one notch to "neutral".
Emerging-market volatility in the wake of Donald Trump's US election win had now subsided, it said.
In November last year, the bank took its assessment down two levels from "overweight" to "underweight".
In response, the Indonesian government stopped doing business with JP Morgan.
In the month after the US presidential election, funds had sold large amounts of emerging-market countries' shares and bonds, bank researchers said in a note to clients.
"Our tactical downgrade two months ago was driven by the risk of Indonesia underperforming the Asia Pacific ex-Japan," they said.
"Bond volatility risks have now played out, in our view."
However, it said there were still concerns about further volatility, hence the neutral rating.
Indonesian Finance Minister Sri Mulyani said the upgrade was "good", but made no further comment.
US investment bank JP Morgan Chase has upgraded its view of the Indonesian stock market, partially reversing a previous downgrade that prompted an angry reaction from the government.