HSBC India Strategy: Targets Sensex at 90,520 by 2025; KIMS and Axis Bank among top picks

HSBC remains bullish on India, maintaining an "Overweight" stance with a Sensex year-end target of 90,520 for 2025, implying a 15% upside from current levels,

While growth in India appears to be settling at a slightly slower but still comfortable pace, certain risks and challenges to the equity markets remain evident.

India's Growth Story: Slower but Resilient

India’s economic growth, while robust, seems to be transitioning to a lower trajectory compared to the rapid expansion seen in recent years.

Earnings have grown at an impressive, annualized rate of 25% since 2020, supporting the high valuations at which Indian markets currently trade.

However, several high-frequency macroeconomic indicators, such as Purchasing Managers' Index (PMI) numbers, GST collections, and auto sales, have recently shown signs of weakening.


This trend has led to downward revisions in earnings estimates for over 60% of listed companies since the end of September.

Earnings per share (EPS) growth is becoming increasingly skewed, with small and mid-cap stocks expected to grow at 30%, while large-cap counterparts are projected to grow by only 12%.

Given that foreign investors primarily focus on large-cap stocks, the slower growth in this segment presents a challenge.

Risks to India Equities

Despite India’s status as one of the fastest-growing markets globally, high earnings multiples pose a significant risk. Investors are likely to reassess their positions if earnings growth stalls further, especially given the high valuations.

This near-term risk to Indian equities could impact market performance, even as the long-term growth story remains intact.

HSBC's Stock Picks: KIMS and Axis Bank

In its list of 12 Asia stock ideas for 2025, HSBC has included two Indian companies: KIMS (Krishna Institute of Medical Sciences) and Axis Bank.

KIMS is positioned to benefit from India’s capex upcycle and growing demand for healthcare services. Axis Bank stands out with an attractive valuation compared to its peers, offering a strong investment case in India’s financial sector.

(With inputs from ETNow)

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)