HSBC upgraded Indian equities to "Neutral" from "Underweight" on Thursday, as easing crude oil prices reduced earnings risks for companies in the world's third-largest crude importer and measures to stabilize the rupee drew back foreign investors. The brokerage raised its 2026-end target for the BSE Sensex index to 84,000 from 80,500 earlier, indicating ‌an 8.6% upside ⁠from current ⁠levels. Brent crude futures are down 33% from their April peak of $126.41 as Middle East tensions eased following an interim U.S.-Iran agreement to end the war. "The oil shock has eased, taking some pressure off margins and lowering the risk of significant earnings downgrades," HSBC said in a note. The upgrade follows a similarly positive view from Goldman Sachs earlier ⁠this month, ‌which cited lower commodity prices and a more stable currency for India's improved outlook. Foreign investors have bought Indian shares ⁠worth $1.6 billion so far in July, turning into net buyers after four months of heavy selling. Overall, they have sold $27.7 billion in Indian equities in 2026, surpassing last year's record outflow of $18.9 billion. The sell-off was partly linked to funds rotating into AI-linked stocks, away from markets such as India, which have limited exposure to the theme. HSBC said the sustainability of the foreign ‌inflows is a key concern for India, especially as attention shifts back to AI-linked opportunities. The brokerage said South Korea is still Asia's strongest growth story, but ⁠leverage and concentrated positions will likely keep volatility elevated. The brokerage had downgraded India to "Underweight" in April amid a surge in crude oil prices, saying India looked less attractive than North East Asian peers. Despite recent gains, Indian equities are still down 7.7% year-to-date, lagging MSCI's broadest index of Asia-Pacific stocks outside Japan, up 21%. HSBC said it prefers private banks, consumer discretionary, real estate, commodities, and select industrials in India.