UBS Says Investors Won’t Make Money On Indian Stocks This Year

UBS says investors won’t make any profits from the gauge of the nation’s biggest companies.

Nupur Acharya

09 Jan 2018, 05:40 PM IST

Employees walk past electronic boards displaying stock figures in the atrium of the National Stock Exchange of India Ltd. (NSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

(Bloomberg) -- The euphoria that’s seen Indian equities building on record highs this year will fizzle out, UBS Securities India Pvt. says.

The NSE Nifty 50 Index will close at around 10,500 points on Dec. 31, analysts led by Gautam Chhaochharia wrote in a note Monday, suggesting investors won’t make any profits from the gauge of the nation’s biggest companies.

“A goldilocks scenario of a sharp earnings recovery, but with continued robust macro stability (benign inflation and currency rates) appears priced in,” Chhaochharia said in the report.

The steepest annual rise in nine years estimated in FY19. Source: Data compiled by Bloomberg

The Nifty has been rising in line with Asian markets after a wobbly start to the new year. And even as most investors expect stocks to rally this year on the back of stronger earnings growth, UBS says results will disappoint the consensus estimate of 22 percent growth for the year starting April 1.

Lower interest rates, combined with strong local flows into financial assets were key drivers for the gauge, which gained 29 percent last year. UBS expects this “support” to fade as the demonetization-led liquidity abates and if interest rates increase.

— With assistance by Ameya Karve