Amidst the ongoing decline in the stock market, there is another shocking news for investors. Brokerage firm HSBC has reduced the rating of the Indian stock market from “overweight” to neutral. Not only this, it has also cut the target of Sensex for 2025 outright by 5,000 points. HSBC had earlier said in its report that it expects the Sensex to reach the level of 90,520 in 2025. But now only a few days have passed since the new year and HSBC has changed its target amid the ongoing decline in the market. HSBC said that now it expects the Sensex to reach only 85,990 points this year. However, this new level is still 10% above the current level in Sensex.
Where HSBC has cut the target of Sensex. At the same time, it has given the stock markets of China and Hong Kong an ‘overweight’ rating. It has also increased the rating of South Korea’s stock market from ‘underweight’ to ‘neutral’.” This means that HSBC expects to make more money in the stock markets of China and Hong Kong than in India at this time.
HSBC said in its note that Indian markets had seen 25% annual growth in recent years, but now profits have slowed down, and valuations have reached 23 times forward earnings, which is extremely high.
HSBC has said that the medium and long-term growth story of Indian markets is strong, but there is limited upside potential in the short-term due to rising costs and slow growth rates, due to which it has decided to reduce the ratings.
HSBC said that due to slowness in earnings growth, it has also cut the growth estimates of Nifty 50 for the current financial year 2025. Earlier the growth estimate was 15 percent, which has now been reduced to 5 percent. The brokerage said investors may reassess their positions and their market returns may remain limited this year.
Meanwhile, the Indian stock market continued to fall for the third consecutive day today. Nifty broke its important support level of 23,500. Except IT shares, there was heavy selling in all other sectoral indices.
Andrew Holland, CEO of Avendus Capital Alternate Strategies, says that despite this decline, the valuations of the stock market are still not very attractive and if they fall further by 3 to 5 percent, then their valuations will become more attractive.
Hollande said that the market is now reaching oversold territory, especially in the banking index, from where a bounce could be seen. He said that along with earnings growth, GDP growth also slowed down, which has weakened investor sentiment. No reason to support the market, such as increase in government expenditure, is visible at the moment.
He said that unless the government starts increasing expenditure, no multiplier effect will be seen in 2025-26. According to him, the average growth of Earning Per Share (EPS) of Indian companies can be between 5-10% in the current financial year.
Also read- ₹5.7 lakh crore lost in stock market! Fall for the third consecutive day, midcap and smallcap indices crashed by 2%
Disclaimer: The views and investment advice given by experts/brokerage firms on Moneycontrol are their own and not those of the website and its management. Moneycontrol advises users to consult certified experts before taking any investment decision.