HSBC downgrades India to ‘Neutral’. Cites softening profits, high valuations
While India has experienced annualized growth of 25% in recent years, HSBC notes that this pace is unsustainable. The brokerage firm has significantly reduced its FY25 earnings growth forecast for the Nifty 50 from 15% to just 5%.
This substantial downward revision reflects concerns about the near-term profitability of Indian companies.
HSBC also points to elevated valuations, currently at 23 times forward earnings, as a cause for concern. These high valuations, coupled with the reduced earnings growth outlook, suggest that the market may be overvalued.
The brokerage firm believes that these factors will likely prompt investors to re-evaluate their positions in the Indian market. This re-evaluation could lead to reduced investment flows and consequently limit market returns in the near term.
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