Mumbai: Close on the heels of foreign investors exiting Indian stock market, global banking major HSBC on Wednesday downgraded its outlook of Indian shares to “underweight” from “overweight”. Explaining its rationale for the downgrade, the bank said Indian markets were over-owned at a time when earnings were expected to slow and the scope of interest rate cuts were diminishing.
This downgrade is the first by a major foreign bank since Indian shares began a rally in 2014 that culminated with the Nifty and Sensex indexes hitting record highs in early March. However, some of the shine has come off Indian markets over the past few weeks as anger over minimum alternate tax claims has pummeled sentiment at a time of rising volatility in global markets.
Although HSBC did not refer directly to reforms, it recommended investors cut their positions in India. During this calendar year, Indian markets have under-performed their global peers due to stretched valuations, delay in refor-ms, controversies surrounding the levy of MAT and muted corporate earnings. In the last 16 sessions, foreign investors have sold nearly $2.2 billion worth of shares.
