Nifty Valuations Now In-line With 5-year Average; What Hsbc Mf Says On Midcaps, Smallcaps

HSBC Mutual Fund successful its latest statement said nan maturation rhythm successful India whitethorn beryllium bottoming retired and that it is constructive connected Indian equities, supported by nan much robust medium-term maturation outlook. 

Interest complaint and liquidity cycle, diminution successful crude prices and normal monsoon are each supportive  of a pick-up successful maturation going forward, nan communal money said.

"Post nan caller correction, Nifty valuations are now in-line pinch its 5- and 10-year averages. We stay constructive connected Indian equities," it said. 

To beryllium sure, Nifty statement EPS estimate for Calendars 2025 and 2026 has revised downward by 2 per cent and 3 per cent, respectively during April. This on pinch nan marketplace recovery, Nifty now trades connected 20.1 times one-year guardant PE. This is now in-line pinch its 5-year mean and a 10 per cent premium to its 10-year average. 

"Valuations successful Midcap and Smallcap abstraction person besides moderated pursuing nan crisp correction complete  January and February," HSBC MF said.

HSBC views were akin to that of overseas brokerage UBS, which connected Tuesday retained its affirmative stance connected nan Indian banal marketplace and group a 12-month target of 26,000 for Nifty. The broking firm, however, sees prospects of 6 per cent downside connected nan 50-pack scale -- successful lawsuit of a world maturation slowdown. 

HSBC said nan world macro situation remains challenging pinch heightened geo-political and economical uncertainties. Announcement of reciprocal tariffs  by nan US management could importantly effect US and world maturation  outlook, if nan tariffs enactment successful place. 

"For India, GDP maturation has improved to 6.2 per cent (YoY) successful Q3FY25. We judge authorities has tried to partially reside  the slowdown successful backstage depletion done nan income taxation complaint cuts successful nan Union Budget. However, a pickup successful backstage capex will beryllium captious arsenic authorities capex is moderating. RBI is besides now trying to easiness argumentation rates  and liquidity conditions rapidly. With USD weakening and diminution successful crude  prices nan room for easing has accrued further," HSBC MF said. 

"Although, world waste and acquisition related  uncertainty remains a headwind to backstage capex successful nan adjacent term, we expect 
India’s finance rhythm to beryllium connected a medium-term uptrend supported by  government finance successful infrastructure and manufacturing, pickup successful backstage  investments and a betterment successful existent property cycle. We expect higher private 
investments successful renewable power and related proviso chain, localization of  higher-end exertion components, and India becoming a much meaningful  part of world proviso chains to support faster growth," HSBC MF said.

Published on: May 6, 2025 3:11 PM IST