UBS Report Predicts 8% Growth in Nifty 50; Financials and Travel Among Top Sectors to Watch

UBS forecasts an 8% rise for the Nifty 50 index, targeting 26,000 within a year. The report favors consumption-oriented sectors like retail and travel, while advising caution on industrials. Financials and real estate remain strong bets, despite potential constraints from government capex and a global economic slowdown.

The Nifty 50 index is anticipated to experience an upward trajectory of 8%, reaching the 26,000 mark over the next year, as projected in a UBS report. The report holds a positive outlook on consumption-driven sectors such as retail, staples, two-wheelers, and travel, alongside a substantial view on financials, real estate, cement, and hospitals.

However, UBS expressed reservations about the industrial and infrastructure sectors, foreseeing a deceleration in government capital expenditure growth to mid-to-high single-digit compound annual growth rates over FY25-27 due to fiscal challenges and social welfare commitments. Private investments may also encounter pressure amid uncertain global economic conditions.

The report was cautious regarding the IT sector due to potential earnings risks from high US exposure and global slowdown concerns. Yet, the UBS IT team remains optimistic about limited downside risks to current valuations. Additionally, generic pharmaceutical export companies face anticipated earnings downgrades from H2 FY26.

Despite trimming India's GDP growth projections, UBS noted potential offsets from lower crude prices and consumption stimulus. The report suggests financials, staples, and travel sectors are poised to outperform unless global growth deteriorates sharply, which could lead to a Nifty 50 decline of up to 6%.

(With inputs from agencies.)