In a significant boost for Indian markets, global financial giant HSBC has upgraded its stance on India to 'overweight' for the Asia region. The brokerage's latest report paints a bullish picture for the country's equities, projecting a stronger performance leading into 2026, driven by favourable economic conditions.
Why HSBC is Bullish on India's Market Trajectory
HSBC Global Research cites a powerful combination of factors supporting its optimistic view. The firm expects lower inflation, ongoing tax reforms, and a more accommodative monetary policy to act as key tailwinds for Indian equities. This positive environment is anticipated to sustain a corporate earnings recovery, with consensus forecasts pointing to 10% growth in FY26 and 16% in FY27.
The brokerage has reiterated its year-ahead projection for the benchmark index, maintaining its Sensex end-2026 target at 94,000. This target implies a potential upside of over 10% from current market levels. "We are overweight India in an Asia context; our unchanged Sensex end-2026 target is 94,000, up 10% from current levels," the HSBC report stated.
Analysts noted that the worst phase of earnings downgrades appears to be over, and recent corporate results have strengthened confidence in the growth outlook. Furthermore, India's valuation premium compared to other emerging markets has moderated back to historical averages, making the entry point more attractive for investors. HSBC also anticipates an increase in foreign fund inflows as global portfolios look to diversify away from AI-centric sectors in other parts of Asia.
Sectors and Stocks Poised for Growth
The report identifies several sectors that are likely to benefit in the coming economic cycle. The automobile sector is expected to gain from the prospect of lower interest rates. Telecom companies should continue to enjoy the advantages of strong pricing and limited competition. Meanwhile, the energy sector is seen as well-positioned to navigate a soft oil price environment.
Building on this sectoral optimism, HSBC has curated a list of its top 10 stock picks for long-term investment, highlighting specific companies with robust growth plans and resilient earnings.
HSBC's Top 10 Stock Recommendations for 2026
State Bank of India (Target: ₹1,110 | Upside: 16%): Expected to match or exceed system loan growth, with a low loan-to-deposit ratio providing room to outpace peers.
Infosys (Target: ₹1,720 | Upside: 9%): Anticipated to benefit from improved global IT spending visibility in FY27, with medium-term growth driven by discretionary projects.
Mahindra & Mahindra (Target: ₹4,000 | Upside: 10%): Liked for earnings resilience and a ambitious plan for 8x growth in its auto business between 2020–2030.
Adani Ports (Target: ₹1,700 | Upside: 13.5%): Seen delivering strong growth, especially in international logistics, with improving margins and higher return on capital employed (ROCE).
Apollo Hospitals (Target: ₹8,510 | Upside: 21%): The hospital business outlook is robust, with its digital arm, Apollo 24/7, nearing cost-neutrality and adding to revenue.
Hindalco Industries (Target: ₹1,040 | Upside: 26.5%): Expected to see strong EBITDA growth, supported by firm aluminium prices and volume growth.
ICICI Lombard (Target: ₹2,250 | Upside: 16%): HSBC's top insurance pick, expected to outperform in premium growth through product and distribution expansion.
Marico (Target: ₹870 | Upside: 20%): Favoured for its aggressive diversification into foods, direct-to-consumer (D2C), and personal care segments.
Kalyan Jewellers (Target: ₹690 | Upside: 49%):Poised for expansion with plans for 84 new stores in India, supporting significant growth and expected margin improvement.
Phoenix Mills (Target: ₹2,110 | Upside: 27.5%): Now India's largest mall operator, it is transitioning into a mixed-use developer with strong leasing momentum.
Disclaimer: The views and recommendations above are from HSBC Global Research and are not endorsed by Mint. Investors are strongly advised to consult with certified financial experts before making any investment decisions.
