HSBC has revised its stance on India to ‘Neutral’ from ‘overweight’. It has also set a BSE Sensex target of Rs 85,990 for 2025, citing reduced corporate profits and high valuations as primary concerns.
Despite India’s impressive 25% annualised growth in recent years, HSBC considers this rate unsustainable. The firm has notably decreased its FY25 earnings growth projection for the Nifty 50 to 5% from the previous 15%, indicating immediate profitability challenges for Indian firms, according to an ET report.
The current valuation metrics at 23 times forward earnings are considered high by HSBC, suggesting potential overvaluation in the market when combined with diminished earnings growth expectations.
These circumstances may influence investors to reassess their Indian market positions, potentially affecting investment inflows and market performance in the short term.
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HSBC’s modified outlook reflects a more reserved approach towards Indian equities, supported by reduced earnings forecasts and valuation concerns.
Recent market activity shows continued volatility in Indian stock market indices. Financial and consumer sector selling pressured the markets on Wednesday, whilst uncertainty regarding US Federal Reserve rate cuts added to investor wariness.
The BSE Sensex concluded at 78,148.49, declining by 50.62 points or 0.06%, whilst the Nifty 50 finished at 23,688.95, dropping 18.95 points or 0.08%.
