New Delhi [India]: Global investment firm UBS has projected an 8% upside for the Nifty 50 index, expecting it to reach 26,000 within a year. The forecast is based on a bottom-up analysis and reflects optimism around consumption-led sectors.
In its latest report, UBS stated:
“Expect 8 per cent upside in NIFTY 50. Bottom-up analysis suggests 8% upside in the NIFTY 50 to a one-year target of 26,000. We are positive on most consumption-oriented sectors spanning retail, staples, two wheelers (2Ws) and travel. We are also positive on financials, real estate, cement and hospitals.”
UBS maintains a constructive stance on financials, real estate, cement, and hospitals, highlighting strong fundamentals and demand trends. However, the firm is less optimistic about industrials and infrastructure, expecting capital expenditure (capex) growth to moderate in the coming years.
Key concerns include fiscal pressure from the upcoming Eighth Pay Commission, a combined state fiscal deficit near 3%, and high social welfare spending, all of which may limit the government’s ability to fund additional capex. Private sector investments could also be dampened by global economic uncertainties.
Despite its cautious outlook on industrials, UBS noted:
“We highlight the UBS Industrials team is constructive on defence and the power equipment value chain.”
UBS is also cautious about the IT sector, citing its high dependence on the US market and risks tied to a global slowdown. Still, their IT analysts believe the downside to valuations is limited:
“We are cautious on the IT sector due to potential earning risk given high exposure to the US and concerns on global growth slowdown.”
The firm also flagged generic pharmaceutical exporters for potential earnings downgrades starting H2 FY26.
On the macroeconomic front, the UBS Economics team has lowered India’s GDP growth estimates, now projecting:
- 6.0% for FY26 (down 30 basis points)
- 6.4% for FY27 (down 20 basis points)
This adjustment factors in global headwinds, although the impact may be cushioned by lower crude oil prices and possible consumption-boosting policies.
UBS concludes that sectors such as financials, consumer staples, retail, two-wheelers, cement, and travel are likely to outperform.
However, in a downside scenario where global growth deteriorates significantly, UBS warns that:
- Nifty 50 could decline up to 6%
- FY26 earnings growth could drop from 13% to 8%