Brokerage firm HSBC has downgraded the Indian stock market to ‘neutral’. The brokerage firm had earlier given it an ‘overweight’ rating. HSBC has reduced the target of Sensex to 85,990 points at the end of 2025, whereas earlier this target was 90,520 points. Revised target means 10% increase from the current level. On the other hand, HSBC is ‘overweight’ on China and has also upgraded its rating on the Hong Kong market to ‘overweight’. Earlier, South Korea’s market has been upgraded from ‘underweight’ to ‘neutral’.
HSBC said in its note that profits have slowed after 25% annual growth in recent years, while valuations have increased to 23 times forward earnings. India’s structure is likely to remain strong in the medium term. However, due to slowing growth amid high valuations, HSBC has decided to downgrade.
HSBC has said in its note, ‘Due to sluggish earnings results, the growth estimates of Nifty 50 during the financial year 2025 have been cut. Earlier the growth estimate was 15 percent, which has been reduced to 5 percent. “Investors may reassess their positions and their market returns are limited.”
According to HSBC’s note, although growth in India has slowed down, it has the strongest growth potential in terms of emerging markets. HSBC has cited several reasons for weak growth and says that the banking sector is struggling with margins and growth. The recovery in the country’s second largest sector – IT is also slow, especially in the European market.