Mumbai: HSBC Global Investment Research has upgraded Indian equities to "overweight" from "neutral" and simultaneously downgraded mainland Chinese equities to "neutral" from "overweight", in a significant reallocation of its Asia equity strategy published on Monday, November 9.

Source: The Hindu BusinessLine

HSBC cited a multi-year valuation reset after a prolonged period of correction and underperformance against other emerging markets, resilient corporate earnings, and strong domestic credit growth as the main reasons for raising its view on India, ANI reported, summarising the bank's Asia-Pacific equity strategy report.

Source: ANI via Indian Economic Observer

21%System-wide credit growth, year-on-year in October
24%Corporate lending growth
25%MSME credit growth
22%Share of global emerging-market funds overweight India

Earnings outlook and the room to run

HSBC strategists Herald van der Linde, Prerna Garg and Adam Qi noted that consensus forecasts point to earnings growth of about 14 per cent for India in FY27 and 16 per cent in FY28, though they described those estimates as slightly optimistic and expected modest cuts in some sectors, The Hindu BusinessLine reported. The bank also pointed out that only about 22 per cent of global emerging-market (GEM) funds are currently overweight on India, leaving scope for foreign allocation to rise if earnings hold up.

HSBC was not alone in turning more positive. Reuters reported that Citi has raised its end-2027 target for the Nifty 50 index to 28,000, as global brokerages bet on a revival in Indian stocks helped by sliding oil prices and a rotation in artificial-intelligence trades.

Source: Reuters via TradingView

Why China lost its overweight tag

On China, HSBC acknowledged low valuations and high shareholder yields but said the absence of meaningful catalysts for a sustained re-rating drove the downgrade to neutral. For India, the bank flagged risks as well: consumer price inflation rose to 5.5 per cent in September 2026, a 23-month high, according to the figures cited in its report.

The upgrade marks a notable shift in global fund positioning towards India at a time when its equity market has lagged Asian peers dominated by AI-linked stocks; HSBC said India now offers diversification and lower volatility within the region. Informist, reporting the same strategy note, said the bank also pointed to moderating valuations and second-quarter results that held up despite higher energy costs.

Source: Informist Media