HSBC Mutual Fund said foreign outflows and rising global bond yields are likely to remain key headwinds for Indian markets, while corporate earnings growth is expected to drive equity returns in the near term. The Nifty 50 fell 6 per cent in September, with the Nifty Midcap 150 down 7.1 per cent and the Nifty Smallcap 250 down 3.1 per cent; IT and auto were the worst-performing sectors, falling 11 per cent and 9 per cent. Foreign institutional investors pulled USD 4.1 billion in September, taking their 2026 net selling to USD 28.3 billion, while domestic institutions bought a net USD 8.1 billion. The RBI raised its repo rate to 5.50 per cent on October 7, and HSBC expects a further rise to 6 per cent if inflation worsens or global rates stay elevated. The Nifty 50 trades at 17 times one-year forward earnings, about 13 per cent below its five-year average valuation.
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- Foreign outflows , rising yields weigh on Indian markets ; earnings to drive recovery : HSBC
HSBC Mutual Fund said Indian equities saw a broad-based correction in September amid higher crude prices, Middle East tensions and tighter monetary policy in major economies. The Nifty 50 fell 6%, the Nifty Midcap 150 dropped 7.1% and the Nifty Smallcap 250 fell 3.1%. Foreign institutional investors pulled USD 4.1 billion in September, taking their 2026 net selling to USD 28.3 billion, while domestic institutions bought USD 8.1 billion. The fund expects corporate earnings to drive returns but flags higher global bond yields and commodity prices as risks, and sees the RBI's repo rate, raised to 5.50% on October 7, possibly reaching 6% if inflation worsens. The Nifty 50 trades at 17 times one-year forward earnings, about 13% below its five-year average valuation.
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