Global brokerage UBS expects domestic stock markets to remain weak and finish the year on a sluggish note. Its Nifty target for December end is 7,500, which is over 100 points lower than current levels and way below the 9,000 mark the benchmark hit last year.
UBS said it remains "constructive" on India from a mid-term perspective, but cautioned that markets are unlikely to see any upside from current levels.
UBS' forecast is bad news for investors, who expected a lasting rally on the Dalal Street following stellar gains last month. After months of subdued trading, Indian stock markets posted their best monthly gain in March in more than four years, tracking a global rally and positive domestic sentiment.
The brokerage expects investors' focus to shift from policy to earnings growth in the aftermath of presentation of the Union Budget. According to UBS, earnings growth expectations for Nifty are still too high and will weigh on the performance of domestic equities.
As of 10.52 a.m., the Sensex traded 23 points higher at 24,906, while the Nifty was up 12 points at 7,615.
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