Global brokerages turn bullish on Indian equities as market rebounds

Mumbai: Global brokerages HSBC, Citigroup and Jefferies have turned more bullish on Indian equities, citing improving earnings prospects, attractive valuations, and the potential for foreign fund inflows as the market stages a sharp recovery.

HSBC Holdings has upgraded Indian equities to Overweight from Neutral, citing resilient corporate earnings and more reasonable valuations. "India offers diversification and low volatility in Asian markets dominated by AI stocks," HSBC said in its latest note. The brokerage favours banks, industrials, consumer discretionary companies, insurers and hospitals.

Citigroup expects the Nifty 50 to reach 28,000 by end-2027, citing a strong earnings outlook, lower oil prices and the prospect of slower artificial intelligence-related capital expenditure as factors supporting Asian equities. The target implies an upside of 12%.

Read more: Can Nifty hit 28,000 before 2028? Citi raises target, sees $12 billion inflows

Jefferies has raised India's weight in its Asia-Pacific ex-Japan relative-return portfolio by two percentage points to 14% from 12%, while retaining its Overweight stance. The brokerage has also cut its allocations to South Korea and Taiwan by one percentage point each, maintaining Underweight positions in both markets.

The upgrades come amid a sharp recovery in Indian equities, supported by lower crude oil prices, a correction in AI-related stocks across global markets and renewed foreign investor buying. Foreign investors have bought around $4 billion worth of Indian equities during the recent rally.

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Since October 23, the Sensex and Nifty have gained 10.8% each, while the BSE 150 MidCap and BSE 250 SmallCap indices have advanced around 8% each.

Citigroup sees significant scope for foreign investor positioning in India to recover. A one-percentage-point increase in active fund allocations to the country could generate around $12 billion in inflows, according to the brokerage.

The brokerage expects Nifty earnings to grow 15-16% annually in financial years 2026-28. It also estimates that a $10 decline in crude oil prices could boost Nifty earnings per share by around 2%, supporting corporate profitability and economic growth.