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HSBC has upgraded Indian equities to "neutral" from "underweight", citing lower crude oil prices, improving corporate earnings prospects and the return of foreign investor flows, according to a Reuters report on Thursday.
Reuters, citing an HSBC research note, reported that the brokerage also raised its end-2026 target for the BSE Sensex to 84,000, up from 80,500 earlier, implying further upside from current levels. According to Reuters, HSBC said the recent decline in crude oil prices has reduced one of the key risks facing the Indian market. "The oil shock has eased, taking some pressure off margins and lowering the risk of significant earnings downgrades," HSBC said in its note, as reported by Reuters. India, the world's third-largest crude oil importer, had faced concerns over rising input costs earlier this year after crude prices surged amid tensions in the Middle East. However, Brent crude has fallen sharply from its April peak as geopolitical tensions eased following an interim agreement between the United States and Iran. The brokerage's latest upgrade comes after it had downgraded Indian equities to "underweight" in April, when higher oil prices had made the market less attractive compared with North Asian peers. The report also says that foreign institutional investors have returned as net buyers in July after four consecutive months of selling. However, HSBC cautioned that the sustainability of these inflows remains an important factor to watch, particularly as global investors may again shift focus towards artificial intelligence-related investment opportunities. The report noted that despite the recent improvement in sentiment, Indian equities remain down about 7.7 per cent so far this year, underperforming the broader Asia-Pacific market outside Japan. HSBC continues to favour private sector banks, consumer discretionary companies, real estate, commodities and select industrial stocks within the Indian market. (ANI)
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