Has Dalal Street's near term outlook improved? HSBC lists 4 headwinds, 3 tailwinds to watch out for

The Indian stock market remained resilient despite global macroeconomic challenges, recording modest gains of 2% in July after a volatile month, and the near-term outlook is now improving, assuming no re-escalation of geopolitical conflicts, HSBC Mutual Fund said in its latest report.HSBC expects India's investment cycle to be on a medium-term uptrend supported by government investment in infrastructure, support to manufacturing and pickup in private investments.

It added that announcements of potential trade deals with the European Union and US should also support exports.India’s corporate earnings recovery continues with strong Q1 FY27 results growth till date and more earnings beat than misses over consensus estimates, HSBC noted, adding that Nifty valuations are now in-line with 10-year average.

We remain constructive on Indian equities on a longer-term basis.

Near-term outlook is now also improving assuming no re-escalation of geo-political conflicts, it added.Explaining the macro-view, HSBC Mutual Fund said the re-escalations in the Middle East that effectively ended the interim ceasefire agreement spooked investors, while the disruption was compounded by a blockade in the Red Sea.