UBS-India has reduced Nifty target for December 2015 to 9,200 from 9,600  to reflect earnings cuts. ''We cut our Nifty target for Dec-2015 to 9,200, to reflect earnings cuts. We now use a higher multiple of 17x one-year forward PE (vs. 16x earlier) as we expect current multiples to likely sustain. The revised target also reflects our view of the growth recovery being slower than expected, as is playing out in quarterly corporate results,'' said Gautam Chhaochharia, UBS Head of India Research.

''It does reflect possibility of near-term consolidation and even profit-taking, given limited absolute upside from current levels near-term. We remain positive directionally and expect the rates cycle to continue surprising the markets positively. India remains overweight (OW) from Asia and EM perspective,'' Chhaochharia said.
 
Earnings forecasts by street and UBS analysts are building in growth acceleration for Consumers, Autos, Banks, Infra/Cap Goods and building in deceleration in IT Services. 

UBS reiterates OW Banks as the rate cycle will be a bigger driver for these stocks (through lower NPLs, and bond book gains) rather than credit growth near-term. UBS is also OW Coal, Oil & Gas/Petchem, Pharma and Telecom & Media.

On the other hand, UBS reiterates underweight (UW) on Auto 2Ws and Consumer Staples to reflect its concerns on rural growth. It is also UW on IT Services and Real Estate. It is Neutral on Auto 4Ws, Consumer Discretionary, Infra/Cap Goods, Power Utilities and Midcaps.

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