India a Safe Haven for Investors Amid Global Jitters, Says HSBC
In spite of trade tensions and global concerns, sentiment has considerably improved, and Indian markets are in a strong position.
As long as domestic policies continue to be beneficial, Indian equity markets provide investors with a haven amidst concerns about global macro uncertainty, according to HSBC Global Investment Research on Wednesday.
In spite of trade tensions and global concerns, sentiment has considerably improved, and Indian markets are in a strong position. “Global investors remain cautious, but Asia and global emerging market (GEM) funds have begun to rebuild positions in India (i.e., reduce their underweights), according to our proprietary positioning data. According to the HSBC analysis, “a weaker dollar and softer inflation suggest the foreign inflows can persist in the coming months.”
Both the central bank and the central government support policy. The Reserve Bank of India (RBI) has taken a more pro-growth position than expected, and government capital expenditures soared to a record high in Q1 2025.
The recent larger-than-expected reductions in the cash reserve ratio (100bps) and benchmark rate (50bps) make this clear. This should be good for growth at home. According to the report, stable inflows from domestic investors give stocks yet another important boost.
Q1 earnings growth was unexpected. Telecom, healthcare, and industrials all reported robust growth. Due to robust retail and services data, consumer discretionary reported a 14% increase in EPS.
“Despite the beat in Q1, we believe a sustained recovery in earnings growth is still a few quarters away,” the report stated.
Due to falling domestic bond yields, which are currently at a three-year low, Indian stocks have experienced a notable recovery in recent weeks. Local stocks benefit greatly from lower local bond yields.
“In this environment, we prefer stocks that we believe offer good growth, preferably for structural or idiosyncratic reasons,” the study from HSBC stated, adding that they are “neutral on India from the Asian perspective with the 2025-end index target of 82,240 for the Sensex” .
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