HSBC has lifted Indian equities to overweight from neutral, and the HSBC overweight India call reverses a downgrade the bank made seven months ago. HSBC Global Investment Research published the new view on Monday 9 November, in its latest Asia equity strategy report. At the same time, the bank cut mainland China to neutral from overweight, marking a clear shift in how it ranks the two markets. The strategists behind the call are Herald van der Linde, Prerna Garg and Adam Qi.
The HSBC overweight India case rests on three points: a multi-year valuation reset, resilient corporate earnings and strong domestic credit growth. The bank said Indian equities had underperformed the broader Asian markets over the past two years, weighed down by stretched valuations, investor rotation into artificial intelligence stocks, higher crude oil prices and broader economic uncertainty. That underperformance, it argued, has now left valuations in line with their long-term average, with the FTSE India index trading at about 19 times forward earnings.
Credit growth is the strongest part of the story. System-wide credit growth rose 21% year on year in October, with corporate lending up around 24% and credit to micro, small and medium enterprises climbing 25%. HSBC’s banking team has raised its estimate for India’s 2026-27 loan growth to around 18%, from 14% earlier. The bank said consensus is forecasting 14% earnings growth for India in 2026-27 and 16% in 2027-28, though it flagged those estimates as slightly optimistic and expects modest cuts in some sectors.
HSBC overweight India sectors it prefers
The HSBC overweight India note names the sectors it likes and the ones it avoids. It prefers financial services, automobiles, retail, services and hospitals, where demand remains firm. Within industrials, the bank named capital goods, cement, ports and electronic manufacturing services. It is least positive on information technology, consumer staples, oil and gas, utilities and pharmaceuticals. The bank said India offers diversification and low volatility in Asian markets dominated by artificial intelligence stocks, a line its strategists used to sum up the case for the upgrade.
Citi made a similar move on the same day. Citi Research raised its Nifty 50 target to 28,000 from 26,000, implying an upside of around 12%, and extended its target horizon to December 2027 from September 2027. Citi cited a resilient domestic earnings outlook, lower crude oil prices and a more measured pace of artificial intelligence-related capital spending. It added Bajaj Finance to its list of top picks, citing growth visibility, a diversified product range and a healthy provisioning buffer. Jefferies also raised India’s allocation in its Asia-Pacific ex-Japan relative-return portfolio by two percentage points to 14%, keeping its overweight stance.
The HSBC overweight India view also notes what has changed in the market itself. The bank said Indian equities remain the most expensive market in Asia, but the premium has narrowed enough to make the case for buying again. It also said a possible removal of long-term capital gains tax for foreign investors could improve India’s appeal. The HSBC overweight India call is therefore built on valuations, credit and earnings together, rather than on any single number.
HSBC overweight India and the risks it flags
The HSBC overweight India call comes with clear risks. The bank warned that elevated oil prices, inflation and El Nino-related disruption could still challenge the outlook, with Brent crude at around 99 dollars a barrel when the report was prepared. Consumer price inflation rose to 5.5% in September 2026, a 23-month high, and HSBC expects the Reserve Bank of India to deliver a further 50 basis-point rate hike in December, after a 25 basis-point increase in October. Only 22% of global emerging market funds are currently overweight India, which the bank reads as room for foreign positioning to improve if earnings hold up.
The market backdrop supports the upgrade. The benchmark index is up nearly 8% this month, the most since July 2022, and the Nifty surged more than 10% over seven sessions before the HSBC note. Overseas funds bought a net 3.6 billion dollars of local shares in the four days through Thursday. The HSBC overweight India view does not promise a straight rise, and the bank itself expects some weakness in economic growth in the coming months, but it puts India back at the top of its Asia preferences after two years on the sidelines.