Ubs Sees Nifty At 26,000, Shares 4 Reasons For Stock Market Optimism

UBS connected Tuesday maintained its affirmative stance connected nan Indian banal marketplace and group a 12-month target of 26,000 for Nifty. The overseas brokerage, however, sees prospects of 6 per cent downside connected nan 50-pack scale -- successful lawsuit of a world maturation slowdown. 

UBS sees a consumption-led betterment successful FY26 and FY27 aft anemic depletion and capex cycles successful FY25. It noted that little lipid prices would assistance GDP maturation and thief easiness inflation. Besides, nan finance patient sees India amended placed than its Asian peers to upwind US tariffs effect and a world maturation slowdown. Lastly, it finds valuations reasonable pinch nan market's one-year guardant PE aggregate astatine past 7-8 twelvemonth average. 

In lawsuit of world maturation slowdown, Nifty whitethorn spot a 6 per cent downside arsenic statement net maturation of 13 per cent for FY26 could gaffe to 8 per cent, UBS said noting that 20 per cent of Nifty's net are linked to world growth. 

Its Economics squad has trim FY26 India GDP by 30 ground points to 6 per cent and FY27 GDP by 20 bps to 6.4 per cent to facet imaginable world maturation slowdown. The offsetting factors are little crude and use of depletion stimulus, UBS said.

"Bottom-up study suggests 8 per cent upside successful nan Nifty to a 1 twelvemonth target of 26,000. Financials, staples, retail, 2Ws, cement and recreation should outperform. In lawsuit of world maturation slowdown, Nifty Index could person 6 per cent downside arsenic statement net maturation of 13 per cent for FY26 could trim to 8 per cent," UBS said.

The overseas brokerage is affirmative connected astir consumption-oriented sectors spanning retail, staples, two-wheelers (2Ws) and travel. It is besides affirmative connected financials, existent estate, cement and hospitals. 

The brokerage is little sanguine connected industrials and infrastructure, arsenic authorities capex maturation should beryllium debased astatine mid-to-high single-digit CAGR complete FY25-27 arsenic eighth salary committee payouts strain fiscal space. It noted that nan mixed fiscal shortage of nan authorities governments is adjacent to 3 per cent and ongoing societal use spending has placed further capex constraints. 

Besides, immoderate backstage capex could beryllium impacted fixed uncertainty complete world growth. "We item nan UBS Industrials squad is constructive connected defence and nan powerfulness instrumentality worth chain. We are cautious connected nan IT assemblage owed to imaginable earning consequence fixed precocious  exposure to nan US and concerns connected world maturation slowdown. We item nan UBS IT squad is affirmative connected its sum arsenic successful nan team's view, downside to existent valuations is limited. We are cautious connected generic pharma export names and expect net downgrades starting successful 2HFY26," it said.
 

Published on: May 6, 2025 2:32 PM IST