Global financial services firm HSBC has upgraded Indian equities to ‘overweight’ from ‘neutral’, citing resilient corporate earnings, improving growth prospects and more attractive valuations after a prolonged period of market correction and underperformance compared with other emerging markets.
In its latest Asia-Pacific equity strategy report, HSBC said Indian equities offer an attractive investment opportunity, supported by improving earnings momentum, strong credit growth and policy measures aimed at supporting economic growth and currency stability.
The report noted that Indian markets have undergone a multi-year valuation correction, making stocks more reasonably priced, particularly in the large-cap segment. It also pointed out that only 22 per cent of global emerging market (GEM) funds are currently overweight on India, leaving room for further foreign investor allocations.
"Growth remains resilient despite a series of macro shocks (i.e., higher interest rates and oil)," the report said, adding that the pace of earnings downgrades had become significantly more modest.
HSBC also highlighted India's relatively low market volatility and diversification benefits, which make the country an attractive investment destination at a time when Asian markets are increasingly dominated by artificial intelligence-related stocks.