UBS cuts year-end Nifty target by 5% to 8,200

Global brokerage firm UBS has trimmed its Nifty target for December-end by nearly 5 per cent to 8,200 from 8,600 earlier on account of slower-than-expected recovery in India's economic growth.
Further, UBS has lowered its top-down earnings growth for Nifty at 8 per cent from 10 per cent for the current financial year. It has also cut the earnings growth estimates to 15 per cent from 18 per cent for the next fiscal (2016-17).
"Growth recovery will be slow, likely disappointing versus street expectations," UBS Head of India Research Gautam Chhaochharia said in a note today.
"This is especially on hopes of public spending driven capex cycle and in context of some recent green shoots in macro growth data points," Chhaochharia added.

Moreover, he noted that "hopes from a significant government wage bill stimulus is also likely to underwhelm".
While UBS continues to remain positive in medium term on account of interest rates, reforms and India's sustained relative attractiveness, the leading brokerage said "its new Nifty target of 8,200 vs 8,600 earlier for end-December 2015 implies reasonable upside post recent market correction".

The 50-share NSE benchmark index gained 129.45 points, or 1.71 per cent, to end at 7,688.25 today.
According to UBS, India's continued out-performance compared to emerging markets "didn't show up over the last two weeks".
"India's relative attractiveness versus emerging markets and even other markets globally has helped it outperform over the last one year. This is also reflected in positioning amongst the investors and relative valuations," it added.