India is a strategic long-term growth market in Asia, poised to benefit from AI, data centre, and digital infrastructure investments, according to an HSBC report. The country's role in the energy transition further strengthens its outlook.
India continues to stand out as a strategic long-term growth market within Asia, supported by strong structural fundamentals, favourable demographics and rising digital adoption, according to HSBC's Investment Outlook Q1 2026-Resilience in a Transforming World.
Digital and AI Investment Hub
The report highlights India's role as a key beneficiary of Asia's accelerating AI, data centre and digital infrastructure investment cycle, driven by rapid growth in cloud usage, competitive energy and labour costs, and expanding domestic demand for digital services.
HSBC notes that Asia, including India, is expected to lead global data centre capacity growth over the coming decade, with India attracting increasing interest from global hyperscalers due to policy support, improving power infrastructure and a large digital consumer base.
Energy Security and Climate Transition
The report also underscores India's importance in the broader energy security and climate transition theme, highlighting renewable energy expansion, grid investments and strategic energy cooperation with global partners.
"Asia's robust renewable energy infrastructure, land availability, lower labour and electricity costs, power grid stability and more friendly regulatory environment have attracted many US hyperscalers to invest in data centres, especially in ASEAN and India," the report notes.
Rising electricity demand from AI computing and data centres is expected to further support infrastructure-led growth.
Investment Outlook: Short-term Neutral, Long-term Core
While maintaining a constructive medium-term outlook, HSBC has adopted a neutral stance on Indian equities in the near term, stating that it is awaiting clearer evidence that government reforms will translate into sustained earnings acceleration.
Other Asian markets are currently preferred for tactical overweight positions. Nevertheless, HSBC reiterated that India remains a core strategic allocation within Asia, anchored by its young population, expanding digital economy, growing domestic consumption and improving macroeconomic stability.
It says "Asia remains a key engine of growth, with China stabilising and India maintaining strong medium-term promise."
The report highlights that India's long-term investment case remains intact, particularly across digital infrastructure, energy transition and local currency fixed income, positioning the country as a key pillar of Asia's growth in a transforming global economy.
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