Global research firm HSBC has upgraded its stance on Indian equities from ‘Neutral’ to ‘Overweight’, citing improved valuations, supportive government policies, and resilient domestic investor flows. The firm has set a Sensex target of 94,000 by the end of 2026, implying a potential upside of over 13 percent from current levels.
In intra-day deals today, Wednesday, September 24, the Sensex lost 494 points to its day’s low of 81,607.84.
The upgrade marks a strategic shift in HSBC’s regional equity outlook, positioning India as an attractive market amid broader Asian volatility. Earlier in January, the firm had downgraded Indian equities due to a slowdown in growth coupled with high valuations, which limited upside potential.
According to HSBC, India now stands out as a relatively attractive investment destination. “India now appears attractive on a regional basis: we move to overweight from neutral,” the report stated, signalling a stronger preference for Indian equities compared with other Asian markets.
Why is HSBC bullish?
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. The firm described India as a “quiet corner” amid turbulence in other Asian markets like Korea and Taiwan, with policy support and stable macro fundamentals underpinning its relative strength.
HSBC noted that India’s appeal lies in a combination of normalized earnings valuations, light foreign fund positioning, and a government focused on reforms and capex-led growth. In contrast to crowded trades in Korea and Taiwan, India’s market has experienced foreign fund withdrawals over the last 12 months, yet local investors have remained steadfast.
“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,” the report added.
HSBC emphasized that Indian equities now appear attractive on a regional basis and will likely benefit from ongoing policy momentum. The firm also noted that US tariffs will have minimal impact on the profits of most listed Indian companies.
While earnings expectations may moderate, HSBC believes this is not a major deterrent due to broader investor confidence and policy support, providing a strong base for medium- to long-term performance.
Asia-Pacific Outlook and Regional Positioning
More broadly, HSBC observed that Asia-Pacific equities have risen approximately 20 percent year-to-date, primarily driven by domestic retail investors despite significant foreign fund outflows. Mainland China and Hong Kong remain in HSBC’s “Overweight” basket, with projected returns of +21.0 percent for FTSE China and +16.4 percent for FTSE Hong Kong by 2026.
Korea has been downgraded to ‘Underweight’, while ASEAN markets remain subdued due to political uncertainties. Japan continues to benefit from a weaker yen but is now considered stretched. Amid these dynamics, India emerges as a top overweight call in HSBC’s regional playbook, supported by relatively stable positioning, favourable valuations, and long-term macro resilience.
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