HSBC has downgraded Indian shares to "underweight" from "overweight". According to a Reuters report the firm has cited slowing earnings growth, little room for rate cuts and potential negative impact from an unusual weather due to El Nino.
Many foreign brokerages have recently downgraded Indian stocks as earnings growth have remained poor. There are also worries that foreign funds in the past have bought heavily into the Indian markets and they maybe looking to now book profits.
Money has been moving to China because of the large IPOs there and also because these markets have outperformed in the last one year.
There maybe further selling by foreign portfolio investors, in Indian shares in the coming days.