August 23, 2013 / 8:30 AM / 4 years ago

HSBC downgrades Indian shares to 'neutral'

Reuters Market Eye - HSBC downgrades Indian equities to “neutral” from “overweight”, citing a sharp rise in the cost of equity for companies and a slowing growth.

Employees walk out of the Bombay Stock Exchange (BSE) building in Mumbai August 22, 2013. REUTERS/Danish Siddiqui

The bank says India will continue to struggle with the trade-off between defending a currency and supporting growth.

HSBC adds the main catalyst for recent volatility in Indian equities was when policymakers decided to tighten liquidity to stem capital outflows.

J.P.Morgan also downgraded Indian shares on Tuesday to “neutral” from “overweight”, citing strain in balance of payments.

Reporting by Abhishek Vishnoi

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