Global brokerage major HSBC has upgraded Indian equity markets to ‘neutral’, saying ‘green shoots’ are emerging and has increased its Sensex target for the year to 26,000 from 25,000.
According to the financial services major, Indian equity market has underperformed and its premium to the rest of the region is shrinking. Moreover, macroeconomic data like PMI and auto sales suggest the earnings environment might improve.
“We raise India to neutral in an Asian context. We raise our 2016 Sensex target to 26,000 (from 25000),” HSBC said in a research note. Investors have been hoping for a cyclical recovery since the summer of 2014 when Prime Minister Narendra Modi came to power, which has so far remained elusive. But things are starting to improve, the report said.
According to HSBC’s industrials analyst, Ashutosh Narkar, ‘green shoots’ are emerging, with high-frequency data improving over the past few months, including demand for cement, long steel consumption, and power.