HSBC, JPMorgan, and Goldman Sachs Downgrade India Amid Global Economic Concerns

Global Brokerages Turn Cautious on India Amid Geopolitical Tensions

A growing chorus of global brokerages is turning cautious on India as geopolitical tensions and crude oil prices above $100 per barrel begin to reshape the macro outlook. While India's structural growth story remains intact, near-term risks around inflation, currency weakness, and earnings downgrades are forcing a tactical rethink. The Strait of Hormuz disruption has emerged as a key pressure point, raising concerns over energy supply shocks in a country heavily reliant on imports.

As a result, multiple global houses have cut Nifty targets, lowered earnings expectations, and downgraded market stance, signalling that valuations may no longer fully justify the risks. The shift reflects a broader transition from optimism to caution, with investors now closely tracking oil prices, inflation trajectory, and the durability of domestic demand.

The Indian benchmark indices Nifty and Sensex have risen around 10% this year so far. However, foreign brokerages are now warning of potential risks to the market.

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Nifty Targets Cut by Global Brokerages

According to JPMorgan, the global brokerage downgraded Indian equities to "neutral" from "overweight," citing a combination of elevated valuations and rising macro risks linked to the surge in crude prices amid the Iran conflict. The brokerage cut its year-end Nifty 50 target by 10% to 27,000, while also lowering its bull case to 30,000 from earlier levels.

HSBC also downgraded India's equity market rating to "underweight" from "neutral," flagging risks from rising inflation and a potential slowdown in domestic demand. The brokerage noted that while valuations have corrected from earlier highs, they could turn expensive again as earnings downgrades begin to play out.

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Nomura highlighted that disruptions in the Strait of Hormuz could have a significant macro impact, given the route accounts for 20-25% of global oil trade and a large share of LNG flows. The brokerage cut its December 2026 Nifty target to 24,900 and flagged the possibility of an additional 5% correction in equities.

Goldman Sachs downgraded Indian equities to "marketweight" from "overweight," citing a worsening macro mix due to sustained high energy prices. The brokerage cut its Nifty 12-month target to 25,900 from 29,300 earlier, even as it trimmed earnings growth forecasts by 9 percentage points over two years.

Citi Research lowered its year-end target for India's benchmark Nifty 50 index, cautioning that the ongoing conflict in the Middle East could weigh on the country's economic growth and corporate earnings. The global brokerage has cut its Nifty target to 27,000 from the earlier estimate of 28,500.

Despite the cautious stance, some brokerages are still seeing opportunities in certain sectors. JPMorgan prefers sectors like financials, materials, consumer discretionary, hospitals, defence, and power, while remaining underweight on IT and pharmaceuticals. HSBC sees selective opportunities in segments such as private banking, base metals, and healthcare.