A broker (L) watches a TV news channel as another monitors share prices at a brokerage firm in Mumbai.

Foreign brokerages are turning not so optimistic in their outlook of Indian stock markets on the back of slow pace of reforms, weak corporate earnings, less scope for interest rate cuts and deficient monsoon rainfall.

Investment banker Citibank has revised its December 2015 Sensex target to 32,000 from the earlier forecast of 33,000, in line with its peers HSBC and UBS who have also downgraded their targets for the Sensex. 

"We see 2015 is turning out to be very different from 2014 for India investors. It is materially underperforming peers, has disappointed on both its growth trajectory and of earnings, has seen some days of outflows, and is feeling very over-owned," Aditya Narain and Jitender Tokas, analysts at Citibank told Business Standard.

Last month, Indian stock markets had witnessed high volatility as overseas investors aggressively offloaded their holdings leading to heavy capital outflow. Foreign investors seem to be disillusioned by the slow pace of reforms by the Narendra Modi government.

Delay in passing key reform bills such as the Goods and Services Tax (GST) Bill and Land Acquisition Bill by the Modi government even after completing almost one year in power raise concerns over its ability to bring more reforms in the future. 

"There is a perception that the government has got a little log-jammed in Parliament and the perspective is testing the faith of investors (which had) been liking it for quality, transparency, macro direction," the Citibank analysts added.

Last week, HSBC has cut the outlook for Indian stocks to 'underweight' from 'overweight', choosing to stay away from the markets at current levels and re-enter after a decline of 10 percent.

"For earnings expectations to recover on a sustainable basis, they would need to see a recovery in the capex cycle and credit growth, but that is not visible yet. While reforms have been put in place, it might take some time before they impact corporate earnings," HSBC told The Economic Times.

Lack of investments has led to companies reporting lacklustre earnings in the last fiscal year, with 396 companies showing a fall in revenue by 7 percent and profit by 6 percent on yearly basis, Firstpost reported citing a research note by SBI.

HSBC slashed the December Sensex target to 26,900 from 30,100.

Last month, UBS had also cut the year-end target for Nifty to 9,200 from 9,600 citing weak corporate earnings outlook.