Global brokerage firm UBS has maintained its positive outlook on the Indian stock market, setting a 12-month target of 26,000 for the Nifty 50—indicating a potential upside of nearly 6 percent from its current level of 24,414.4. Over the past year, the index has posted a gain of ~9.5 percent, while in 2025 so far, it has delivered a return of 2.83 percent. However, UBS also cautioned that in the event of a global economic slowdown, the Nifty 50 could face a downside risk of up to 6 percent.
Reasons for stock market optimism
The brokerage anticipates a recovery in consumption during FY26 and FY27, following subdued trends in consumer spending and capital expenditure throughout FY25. A drop in crude oil prices is expected to support GDP expansion and contribute to easing inflationary pressures.
Additionally, UBS believes India is comparatively better positioned than other Asian economies to withstand potential challenges from U.S. tariffs and a broader global economic slowdown. The firm also considers current market valuations to be fair, with the Nifty’s one-year forward price-to-earnings ratio aligning with its 7–8-year historical average.
However, UBS warns that if global growth weakens, the Nifty 50 could decline by as much as 6 percent, as consensus earnings projections for FY26—currently estimated at 13 percent—may fall to around 8 percent. Approximately 20 percent of the Nifty’s earnings are tied to global economic conditions.
In light of these risks, UBS has trimmed its GDP growth forecast for India by 30 basis points to 6 percent for FY26 and by 20 bps to 6.4 percent for FY27, while noting that lower crude prices and consumption-driven stimulus could help offset some of the downside pressures.
The brokerage maintains a positive outlook on consumption-driven sectors, including retail, staples, two-wheelers, and travel, along with financials, real estate, cement, and hospitals.
In contrast, UBS remains cautious on industrials and infrastructure, citing limited room for government capex growth—expected to be in the mid-to-high single digits CAGR between FY25–27—due to fiscal pressure from the upcoming eighth pay commission and continued social welfare spending. It observed that the collective fiscal deficit of state governments is nearing 3 percent, with continued social welfare expenditures further limiting capex capacity.
Additionally, private capex may be affected due to uncertainty around global growth. UBS’s Industrials team holds a positive view on defence and the power equipment value chain. However, it remains cautious on the IT sector due to earnings risks tied to significant US exposure and global slowdown concerns, though it believes valuation downside is limited. UBS is also careful of generic pharma exporters, anticipating earnings downgrades beginning in the second half of FY26.
Nifty 50: Current Support and Resistance Levels
The Nifty 50 index is currently trading around 24,414.4. The immediate support levels are seen in the range of 24,200 to 24,230, with a broader support zone between 24,000 and 23,900. The 200-day Simple Moving Average (SMA), currently near 23,649, also provides a key support base that may help cushion any potential declines.
On the higher side, resistance is placed near 24,600, acting as a critical breakout point. A move above this level could open the path toward the next resistance zone between 24,700 and 24,850. Sustaining above these levels may indicate continued upward momentum, while a fall below 23,800 could signal a shift toward a more cautious market outlook.
Written by Shivani Singh
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