HSBC has upgraded India’s equities to ‘Overweight’ from ‘Neutral’, citing strong domestic investor flows, supportive government policies, and attractive valuations. The firm projects the Sensex could reach 94,000 by the end of 2026, highlighting India’s resilience amid broader Asian market volatility and policy-driven growth.
Global research firm HSBC has upgraded India’s equities to ‘Overweight’ from ‘Neutral’, citing improved valuations, supportive government policies, and resilient domestic investor flows, while also setting a Sensex target of 94,000 by the end of 2026, implying a potential upside of over 13% from current levels.
The upgrade marks a shift in HSBC’s regional equity strategy, which now sees India as a relatively attractive market amid broader Asian volatility.
In its latest “Asia Equity Insights Quarterly,” HSBC highlighted that while foreign investors have pulled back from Indian equities over the past year, domestic investors have remained resilient, providing a cushion to the market.
HSBC noted that India has been a “quiet corner” amid the turbulence seen in other Asian markets like Korea and Taiwan, with policy support and stable macro fundamentals contributing to the country’s relative strength.
According to HSBC, India’s appeal lies in a combination of normalised earnings valuations, light foreign fund positioning, and a government that continues to focus on reforms and capex-led growth.
The firm believes these factors provide a strong base for equities to perform over the medium to long term. While earnings expectations may moderate, HSBC does not see that as a major deterrent, thanks to broader investor confidence and policy momentum.
More broadly, HSBC observed that Asia-Pacific equities are up ~20% YTD, driven mostly by domestic retail investors, despite heavy foreign fund outflows. Mainland China and Hong Kong remain in HSBC’s “Overweight” basket as well, with projected returns of +21.0% for FTSE China and +16.4% for FTSE Hong Kong by 2026.
Korea, however, has been downgraded to ‘Underweight’, and ASEAN markets remain subdued due to political uncertainties. Japan continues to benefit from a weaker yen but is now considered stretched.
Also read:A lost year for Indian equities: Sensex delivers 0% returns in 12 months, leaves investors empty-handed
Nonetheless, it is India that now stands out in HSBC’s regional playbook, driven by relatively stable positioning, favourable valuations, and long-term macro resilience, making it one of the top overweight calls in Asia for the research firm.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
