The recent report from HSBC Global Private Banking highlighting their bullish outlook on Indian equities presents an interesting opportunity for investors. With the global economic outlook remaining healthy and central banks cutting rates, the bank believes that risk assets will continue to perform well in the first half of 2025.
The bank’s overweight position on equities in the UK, Japan, India, and Singapore, in particular, is driven by their favorable growth potential and risk-reward profile. In the case of India, HSBC GPB sees the recent pullback in Indian equities as a chance to add exposure, citing double-digit earnings growth, superior return on equity, and robust economic fundamentals as key factors.
Furthermore, the bank prefers large-cap stocks over mid- and small-cap stocks for their defensive nature and reasonable valuations. While financials and industrials sectors remain top picks, there are growing uncertainties surrounding the consumer discretionary sector.
In terms of fixed income, HSBC GPB expects two rate cuts by the RBI in February and April, bringing the policy rate to 6%. The bank is bullish on Indian local currency government bonds, anticipating them to outperform cash in 2025. Additionally, the bank predicts the USD-INR to end the year at 86.
Looking at the broader Asia ex-Japan region, HSBC GPB forecasts resilient GDP growth of 4.4% in 2025, driven by strong domestic growth in India and ASEAN, as well as China’s policy stimulus. India’s domestically driven earnings profile is seen as defensive against US tariff risks.
In conclusion, HSBC Global Private Banking’s positive stance on Indian equities and the broader global market outlook present an optimistic view for investors. With a focus on equities, fixed income, and regional economic trends, investors may find valuable insights in the bank’s outlook for the year ahead.
