HSBC picks 10 stocks, says AI rotation outflows 'largely done'
Revealing its equity strategy, HSBC said it favours quality growth names in domestically driven sectors such as financials, autos, retail, and hospitals, where demand remains firm.
- Aug 5, 2026,
- Updated Aug 5, 2026 1:18 PM IST
HSBC, in its latest strategy note, highlighted ICICI Bank Ltd and Cholamandalam Investment Ltd among lenders, Titan Company Ltd among retailers, Mahindra & Mahindra Ltd in the auto sector, Phoenix Mills in real estate, Fortis Healthcare among hospitals, Cummins India, Syrma SGS, and Adani Ports and SEZ among industrials, and Hindalco Industries among materials as its top 10 stock picks.
Stock market strategy Revealing its equity strategy, HSBC said it favours quality growth names in domestically driven sectors such as financials, autos, retail, and hospitals, where demand remains firm. Private banks and real estate look relatively attractive after their underperformance, while diversified NBFCs stand out for their growth profile, it said.
"We also like selected industrials benefiting from government policy support. Within consumption, we prefer consumer discretionary over staples, which look more expensive and are more exposed to rural demand and rising food inflation," HSBC said.
The foreign brokerage said fundamentals are providing an anchor, with India's growth outlook clearly improving.
Q1 results beat Street estimates After a solid March quarter, Q1 results have generally come in better than expected, with 73 per cent reporting in-line or ahead of expectations. There are more earnings beats and fewer downgrades, HSBC said.
The consensus upgraded the full year growth estimates for commodities, financials, industrials and staples, it noted.
"High-frequency indicators remain constructive: credit growth is holding up, demand has been more resilient than expected, and recent RBI policies offer some support to the INR. There could still be some earnings downgrades as the year progresses, but we think the market is likely to look through that. Against this backdrop, we recently upgraded India to neutral within Asia," HSBC said.
$25 billion FII inflows next? HSBC said FII outflows linked to AI rotation have largely played out as more than 80 per cent of active GEM funds are underweight India. Even a move back to 'neutral' from that group alone could drive around $25 billion of inflows, it suggested.
"For context, foreign investors have bought $3.6 billion of Indian equities since mid-June, when India began outperforming the wider region. With domestic equity demand still holding up, even modest but steady foreign inflows could provide meaningful market support," HSBC said.
HSBC, in its latest strategy note, highlighted ICICI Bank Ltd and Cholamandalam Investment Ltd among lenders, Titan Company Ltd among retailers, Mahindra & Mahindra Ltd in the auto sector, Phoenix Mills in real estate, Fortis Healthcare among hospitals, Cummins India, Syrma SGS, and Adani Ports and SEZ among industrials, and Hindalco Industries among materials as its top 10 stock picks.
Stock market strategy Revealing its equity strategy, HSBC said it favours quality growth names in domestically driven sectors such as financials, autos, retail, and hospitals, where demand remains firm. Private banks and real estate look relatively attractive after their underperformance, while diversified NBFCs stand out for their growth profile, it said.
"We also like selected industrials benefiting from government policy support. Within consumption, we prefer consumer discretionary over staples, which look more expensive and are more exposed to rural demand and rising food inflation," HSBC said.
The foreign brokerage said fundamentals are providing an anchor, with India's growth outlook clearly improving.
Q1 results beat Street estimates After a solid March quarter, Q1 results have generally come in better than expected, with 73 per cent reporting in-line or ahead of expectations. There are more earnings beats and fewer downgrades, HSBC said.
The consensus upgraded the full year growth estimates for commodities, financials, industrials and staples, it noted.
"High-frequency indicators remain constructive: credit growth is holding up, demand has been more resilient than expected, and recent RBI policies offer some support to the INR. There could still be some earnings downgrades as the year progresses, but we think the market is likely to look through that. Against this backdrop, we recently upgraded India to neutral within Asia," HSBC said.
$25 billion FII inflows next? HSBC said FII outflows linked to AI rotation have largely played out as more than 80 per cent of active GEM funds are underweight India. Even a move back to 'neutral' from that group alone could drive around $25 billion of inflows, it suggested.
"For context, foreign investors have bought $3.6 billion of Indian equities since mid-June, when India began outperforming the wider region. With domestic equity demand still holding up, even modest but steady foreign inflows could provide meaningful market support," HSBC said.