HSBC Global Investment Research has turned bullish on India. The brokerage firm has raised its stance to ‘Overweight’ from ‘Neutral’. Furthermore, it projected that the Indian domestic index Sensex to touch 94,000 by the end of 2026. This represents an upside of nearly 13% from current levels.
According to the brokerage report, India now looks “attractive on a regional basis.” Despite heavy foreign outflows in recent months, resilient domestic investors and supportive government policies are making India stand out as Asia’s “quiet corner.”
Why HSBC is positive on India
In its Asia Equity Insights Quarterly, the brokerage house noted that India is beginning to look more attractive when compared with its regional peers. “India now appears attractive on a regional basis; we move to overweight from neutral,” HSBC said in its report.
The shift comes after months of underperformance and heavy foreign selling. Yet, unlike other markets that relied on foreign inflows, domestic investors in India have shown resilience. “Although foreign funds have withdrawn significant amounts from India in the last 12 months, a period in which the market has seriously underperformed, local investors have remained resilient,” the brokerage highlighted.
HSBC on India: Valuations and policy support
One of the big concerns for India in recent years has been its stretched valuations. But according to HSBC, this is no longer a major worry. The report added that “while earnings growth expectations can fall a little further, valuations are no longer a concern, government policy is becoming a positive factor for equities, and most foreign funds are lightly positioned.”
This combination, the brokerage noted, makes India a “quiet corner” of Asia, especially when compared with crowded trades in North Asian markets like Korea and Taiwan.
What is happening in other Asian markets?
HSBC also compared the action across other major Asian markets. The Chinese equities, it noted, have staged a strong comeback, especially in Hong Kong.
“After the rally in H-shares – mainland Chinese investors have added a staggering USD140bn, more than double the annual average of USD 60 billion in the last three years – to their portfolio of stocks listed in Hong Kong this year, we think it’s time to build exposure to A-shares alongside H-shares,” the brokerage report added.
On the other hand, the markets in Korea and Taiwan appear crowded, particularly in companies linked to artificial intelligence. HSBC cautioned that “even a small deviation from sky-high investor expectations might lead to sharp corrections.”
HSBC Sensex target at 94,000: What’s driving the optimism?
HSBC’s upgrade of India to Overweight is based on a mix of factors such as resilient domestic flows, improving policy support, and lighter positioning by foreign investors. “India – a quiet corner. In stark contrast to the crowded trades in Korea and Taiwan, India is Asia’s quiet corner,” the report highlighted.