HSBC says financials offer the best risk-return and it also likes industrials for their growth opportunities, forecasting 11-12% year-on-year earnings growth in FY27. Earnings growth is likely to lose momentum in the second half of FY27, and consensus forecasts of mid-teens growth in that period look slightly optimistic, with modest downward revisions expected. Investors are warming to non-AI stories, and India offers diversification, but modest earnings growth leaves the market exposed to rising yields and higher energy costs. HSBC also flagged El Niño risk, as CPI food inflation accelerated to 7.7% in September and could rise further.
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