Sensex Could Touch 94,000 by 2026? Here’s What HSBC’s Upgrade of India to 'Overweight' From 'Neutral' Means

 Global brokerage HSBC has upgraded India’s equity market to “overweight” from “neutral”, pointing to improving macroeconomic conditions, attractive valuations, and policy support that could spur consumption and corporate earnings. The upgrade was outlined in HSBC’s Asia Equity Insights Quarterly Strategy Report released on Wednesday, September 24.

“India now appears attractive on a regional basis: we move to overweight from neutral,” the report said, noting that Indian equities, while lagging emerging market peers over the past year due to a domestic slowdown and concerns over high US tariffs, now look compelling.

Sensex Levels To Watch Out For 
HSBC expects the Sensex to reach 85,130 by the end of 2025 and 94,000 by the end of 2026, implying a potential upside of 13.2% from current levels.
“While earnings growth expectations can fall a little further, valuations are no longer a concern, government policy is becoming a positive factor for equities, and most foreign funds are lightly positioned. We think Indian equities now look attractive on a regional basis and upgrade the market to overweight (from neutral),” the report said.

Pro-Growth Policies and Domestic Consumption Boost
The report highlighted that domestic policies have turned more pro-growth. Tax cuts are expected to support consumption, while the Reserve Bank of India (RBI) is easing monetary policy.

“Domestic policies have turned more pro-growth, tax cuts should support consumption, while the central bank is easing. Valuations are no longer a major headwind, and foreign positioning in India remains light, creating a favourable backdrop,” the report noted.

US Tariffs Risk Largely Priced In
Despite persistent risks such as a slowdown in earnings growth and the impact of US tariffs, HSBC said these factors are largely priced in. Less than 4% of BSE500 companies’ sales come from US exports, limiting the impact. Pharmaceuticals, a key export sector, is also currently exempt.

“Indeed, India faces some of the highest US tariff rates in the world. But most listed equities are domestic in nature and less than 4 per cent of sales for all BSE500 companies come via exports of goods to the US,” the report said.

Inflation Eases, Domestic Investors Remain Resilient
The report also noted that inflation has softened sharply, allowing the RBI to cut rates and ease lending norms. Measures like income tax cuts and the recent GST overhaul are expected to revive consumption and boost demand.

“Although foreign funds have withdrawn significant amounts from India in the last 12 months, a period in which the market has seriously underperformed, local investors have remained resilient,” HSBC observed.

Asia Outlook: Mixed Across Markets
Overall, HSBC’s Asia-wide outlook remains overweight on India, mainland China, Hong Kong, and Indonesia, while remaining underweight on Korea, Taiwan, Singapore, Japan, and Thailand.

 (With Inputs From ANI)

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