HSBC upgrades Indian equity market to 'stable' from 'underweight'

Analysts at the bank have noted that since August-end the Indian stock market has underperformed due to an array of headwinds like a free fall in the rupee and a volatility in crude oil prices

Global financial services firm HSBC has upgraded its rating on Indian equity market to “neutral” from “underweight” on the back of recent corrections and more attractive valuations.

Analysts at the bank have noted that since August-end, the Indian stock market has underperformed due to an array of headwinds, such as a free fall in the rupee and a volatility in crude oil prices, and that these risks still persist despite the underperformance. However, "investors’ weights in India are now at historically low levels and there is an opportunity to add to this," Livemint reported, quoting HSBC as saying in the note.

Oil prices have lost almost a third of their value since early October, weighed down by an emerging supply overhang and widespread financial market weakness. As a result, the rupee has shown a sharp recovery. At 01:23 pm, the domestic unit was trading at 70.89 against the US dollar. The unit has depreciated to as much as 74.48 this year.

HSBC noted that in the past elections were key catalysts for performance and it was likely to become more important. 

They observed that MSCI India EPS (earnings per share) growth consensus expectations were for 18.8 per cent in 2018 and 24 per cent in 2019, which meant India was one of the fastest-growing markets across the region.