MUMBAI — Indian equities may be poised for renewed momentum, with foreign investment expected to rise and market performance showing signs of stabilization, according to a new report from HSBC Global Investment Research. The firm has projected the benchmark Sensex to reach 94,000 by the end of 2026, suggesting that the recent phase of underperformance may have run its course.
“We are overweight Indian equities from the Asia perspective, with an end-2026 index target for Sensex at 94,000,” the report stated. Over the past year, Indian markets have lagged behind their Asian peers by roughly 30 percent. However, HSBC analysts believe the correction phase is largely over, supporting their decision to upgrade India to an overweight position.
Herald van der Linde, Head of Equity Strategy for Asia Pacific, noted that Indian stocks currently represent the largest underweight position in global emerging market portfolios, with only about one-fourth of tracked funds holding an overweight stance on India. This positioning, the report argues, presents upside potential if global investors rebalance.
“India offers a hedge and diversification to those who feel uncomfortable with the ongoing AI rally,” the report said. “India is likely to be an outsized beneficiary of any additional money coming into the emerging market region.”
The report highlighted that valuations, which previously acted as a drag on investor sentiment, are now more reasonable compared to a year ago. Indian equities are also seen as offering better value relative to Chinese markets at present.
HSBC analysts expect earnings across sectors to improve by 2026. Banks, which weighed heavily on growth this year, are projected to recover as deposit structures reset and margins expand. The technology sector is also expected to benefit from stronger demand, while consumer-focused industries, including automotive, may gain from lower inflation, interest rates, and potential GST-related adjustments.
However, the report cautioned that several risks remain, including slower-than-expected earnings recovery, continued global capital concentration in AI-driven sectors, and weaker domestic investor appetite.
Even so, HSBC maintains that India’s long-term growth story remains intact, with structural and cyclical recovery dynamics likely to support equity performance into 2026. (Source: IANS)
