Indian Equities Now Attractive: HSBC Upgrades Rating To ‘Overweight’, Sets Sensex Target At 94,000

HSBC has upgraded its stance on Indian equities from ‘neutral’ to ‘overweight, citing improved valuations and supportive domestic policies.

According to HSBC analyst Herald Van Der Linde, the Indian market, which had underperformed globally since mid-September 2024, now appears attractive on a regional basis.

The brokerage has set a target of 94,000 for the Sensex by 2026-end. The benchmark index closed below 82,000 on Wednesday.

Why Did HSBC Upgrade Indian Equities?

The upgrade is attributed to several factors: moderating growth expectations, easing inflation, and pro-growth domestic policies such as tax cuts and GST reforms. These measures are expected to bolster consumption and investor confidence.

HSBC notes that earnings forecasts for 2025 have been revised downward, with consensus estimates falling to 12%, potentially easing further to 8%-9%. Despite this, valuations are no longer a concern, and foreign funds remain underexposed to India, suggesting potential for increased inflows.

While global uncertainties persist, HSBC believes that India’s domestic-focused companies are well-positioned to weather external headwinds. Its positive outlook is supported by structural factors, such as supply chain shifts and infrastructure development, which enhance India's investment appeal.

How Have The Markets Performed?

The benchmark Nifty50 index, which closed 0.45% lower at 25,056.9, has gained around 5.5% so far this year. The Sensex has added around 4.1%.

This falls significantly short of the growth of its Asian peers this year. The Hang Seng Index has added 32.2% in 2025, the Nikkei has gained 14.4%, the SSE Composite Index in Shanghai has climbed up 18.2%, and South Korea’s KOSPI has surged over 44%.

According to reports, foreign investors have withdrawn over $10 billion from Indian capital markets this year.

However, domestic data signals promise. The HSBC Flash India Composite Output Index data for September indicated that India’s private sector output slowed slightly from the near two-decade highs reached in August, but is still in a strong position.

Despite a slight uptick in wholesale inflation in September, it remains well within the Reserve Bank of India’s 4% target.

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