Global brokerage HSBC on Wednesday, September 24, upgraded its rating on India to ‘overweight’ from ‘neutral’, setting a Sensex target of 94,000 for 2026. The brokerage believes that the country’s valuation is no longer a concern. Furthermore, government policies are considered positive for the market, according to HSBC.
It also noted that US tariffs will have little impact on the profits of most listed companies.
Although foreign funds have withdrawn significant amounts from India in the last 12 months, a period in which the market has seriously underperformed, local investors have remained resilient, according to the report.
Add Zee Business as a Preferred Source
“While earnings growth expectations can fall a little further, valuations are no longer a concern, as the government policy is becoming a positive factor for equities, and most foreign funds are lightly positioned,” the global investment research firm said.
Foreign investors remained net sellers in Asia this year, which is typically unfavourable for regional stock markets.
“Valuations are elevated, but not excessive. However, with retail investors sitting on $22 trillion in cash, some of which is gradually being re-allocated to stocks, we expect Chinese equities to grind slowly higher,” HSBC stated.
In Japan, Korea, and Taiwan, investors are interested in playing AI through these markets, especially in Korea and Taiwan, which are now very crowded trades.
Valuations have run up, and in Japan, the weaker Yen has also supported equities.
ALSO READ: RBI may step in as rupee slides past 88 against US dollar
Corporate governance is a positive long-term theme in Japan and Korea, but it won’t carry markets on its own. After the recent run-up in equities, we downgraded Korea to underweight in mid-August.
“Meanwhile, ASEAN’s investor confidence is low. Politics dominates the headlines in Thailand and Indonesia; for the latter, fiscal prudence is on the radar screen after a cabinet reshuffle,” the investment research firm said.
Sharing his views on the development, Zee Business Managing Editor Anil Singhvi said that the brokerage’s action shows its increasing conviction on India.
