Today, analysts at UBS AG indicated a cut in Nifty earnings forecasts, primarily driven by the financial and IT sectors. This move highlights overlooked aspects in this mixed result season and underscores earnings downgrades. The decision comes amidst UBS's 'underweight' stance on Indian stocks due to weak foreign flows, ordinary growth, and high valuations.
UBS criticized Indian companies for their stagnant capital expenditure (capex) and lack of growth investment over the past decade despite India's macroeconomic stability. His views stand in stark contrast to JPMorgan (NYSE:JPM)'s 'overweight' rating on Indian stocks, which is based on positive investment and demographic trends.
Concurrently, UBS economists project continued economic stability for India. They forecast a FY25 growth rate of 6.2% and predict Consumer Price Index (CPI) inflation to range between 5-6% from November to March, ultimately settling at 5.5% for the full year.
UBS's stance on Indian stocks and the trimmed Nifty earnings forecast reflects a cautious outlook toward the Indian market, highlighting potential challenges despite overall economic stability.
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