NO RETURNS LIKELY FROM NIFTY: UBS

Mumbai, Jan. 9: Projecting zero returns from the Nifty, brokerage UBS has projected a 10 per cent cut in its index target at 10,500 for calendar 2018, even as it remains positive over the longterm.

“Top- down, we forecast Nifty earnings growth will recover from 9 per cent in fiscal 2018 to 13 per cent in 2019, but driven largely by financials,” the brokerage said on Tuesday.

“However, earnings growth is likely to disappoint against consensus forecast of 22 per cent growth for fiscal 2019, implying a 10 per cent cut,” it added.

Accordingly, it estimates “no returns from the Nifty in 2018” and has set the index target at 10,500 for this December.

Besides, UBS also said the economy is likely to recover as it expects GDP to grow from 6.6 per cent in FY18 to 7.4 per cent in FY19.

However, the report noted that a sharp earnings recovery, with continued robust macro stability appears priced in by the markets.

“A sharp earnings recovery appears priced in. The markets are already close to our 2018 target, given optimistic fiscal 2019 consensus earnings expectations, which build in a strong growth recovery,” the report said, adding “alternately, if we factor in realistic growth, the markets are trading at 2year forward earnings”.

UBS' view on the markets is contrary to other global and domestic brokerages.