Growth is likely to remain weak in coming quarters, valuations remain elevated and the Budget may not be enough to reverse the downbeat sentiment, HSBC said in a report.

HSBC believes that the Budget measures put consumer-related sectors such as FMCG, retail, white goods, autos, food deliveries, travel, and leisure in focus and indirectly benefits companies in the areas of credit cards, personal loans, mutual funds, and insurance. A moderation in capex will likely normalise growth expectations for infrastructure-linked companies in construction, capital goods, and cement, many of which trade at elevated valuation multiples, it said.

HSBC remains neutral on India from a regional perspective. “India’s markets have been under pressure since September 2024 as investors worry about soft growth, elevated inflation, and sluggish government capex. The global macro backdrop of a strong dollar and high yields provides limited support,” said the report.

Brokerage Emkay anticipates a market shift from industrials and manufacturing toward consumption, with consumer discretionary as a preferred play on the theme. While staples and financials also stand to gain, both sectors face a disconnect between growth and valuations, it said.

The brokerage has maintained its December 2025 Nifty target of 25,000, based on 21.1x trailing P/E.

Elara Securities feels, markets could slowly move back into growth oriented stocks, a style associated with consumption and away from value style associated with capital goods, infrastructure and PSUs.

The market is expected to digest the Budget announcements and shift its focus back to earnings and the forthcoming RBI policy. Nifty is trading at 19.9x on a one-year forward basis.

Motilal Oswal Financial Services recommends an overweight position on consumption, IT, BFSI, industrials, healthcare & real estate and is underweight on oil & gas, cement, automobiles, and metals.

Published on February 3, 2025