Remain underweight on market as valuations still stretched, says HSBC's Herald

Earnings expectations are too high, economic growth is slowing, and valuations are still stretched, according to him

"While corporate transformations are usually bullish for stock markets in the longer term, our conclusion is that the current slow pace of these transformations does not give us enough reason for us to be revisiting Indian equities," Herald Van Der Linde of HSBC said.

Earnings expectations are too high, economic growth is slowing, and valuations are still stretched, according to him. Markets now reflect this reality, he feels.

"We have seen a notable decline in (foreign) mutual funds' exposure to Indian equities, but we believe it is too early for us to change our stance. Thus, we remain underweight on the market in a regional context," Herald said.

Buy-rated stocks that stand to benefit from industry transformation include Titan, Bharti Airtel, Future Retail, Infosys and Hindalco, he feels.