HSBC downgraded Indian equities to “underweight” from “neutral” – its ​second cut in less than a month – as it ‌expects surging energy prices triggered by the Middle ​East war to threaten the durability ⁠of the country’s earnings recovery. Brent crude is up 42% since the war started in late February and is currently ‌trading above $100 a barrel, raising inflation and growth risks for the world’s third-largest oil importer.

“India ‌now looks less attractive than North ‌East ⁠Asian peers in the current macro setting,” HSBC ⁠said in a note on Thursday, with the benchmark Nifty 50 and Sensex falling 6.7% and 7.9% so far this year – ​among the worst ‌performing markets globally.