Global brokerage firm HSBC on Monday said it is 'underweight' on Indian equities and sees risk of earnings downgrades going forward as the market is trading at a significant premium.According to HSBC, though progress has been made on structural reforms across sectors, equities are not likely to benefit from this as they are trading at a significant premium."Progress has been made on structural reforms, especially in the mining, power and road infrastructure sectors, and monetary policy will remain accommodative, still we chose to remain underweight as earnings expectations remain unrealistically high and the market trades at a significant premium," HSBC said in a research note today.On the positives, it said, the incremental reforms via executive action have been more successful. A strong partnership between the government and the central bank is culminating in reforms in the banking sector.Moreover the government has also widened FDI limits and, by remaining fiscally prudent and keeping the increase in agriculture support prices in check, it has chosen prudence over populism, which has helped India retain macro stability."While we acknowledge some potentially positive developments, this is not yet the time to add to Indian equities. We therefore remain Underweight India," the report noted.Market benchmark Sensex has lost 5.52 per cent so far this year and is hovering around 24,700-levels. The 30-share index had lost over 5 per cent in calender year 2015.The report said though the government has stuck to its fiscal consolidation target and has addressed rural growth issues, benefits to the private sector have so far been limited largely owing to weak business sentiment, stressed assets in the banking system and the slow implementation of infrastructure projects."In this context, the consensus forecast for 18.3 per cent EPS growth is unrealistically high. Thus, we expect to see more earnings downgrades ahead in India in 2016," it said adding "politics and reform are not the real risks to Indian equities. We think high earnings expectations are the problem".