Summary:

HSBC Mutual Fund remains optimistic about Indian equities, citing favourable valuations and improved growth momentum. In May 2025, the Sensex and Nifty rose by 1.7% and 1.9%, respectively, while the NSE Midcap and BSE Smallcap outperformed with gains of 6% and 10.6%. Capital goods led sectoral gains, followed by real estate and metals. Despite a 1% downward revision to the Nifty’s CY26 EPS projection, valuations remain in line with long-term averages, indicating continued market strength.

HSBC Mutual Fund expects India’s economic cycle to recover, supported by declining oil prices, stable liquidity, and the expectation of a normal monsoon. While global uncertainties may temporarily affect private capital expenditure, growth is expected to be driven by public infrastructure investment, real estate demand, and private sector participation. Emerging sectors such as renewable energy, advanced manufacturing, and integration into global supply chains are also likely to contribute. Additionally, easing monetary policy, a weaker rupee, and lower oil prices support the possibility of further rate cuts. Despite external risks, HSBC MF remains bullish on Indian equities due to strong domestic fundamentals.

Source: IBEF

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