UBS has cut its year-end target for the Bombay Stock Exchange benchmark index by 9.5% to 19,000 points from its earlier estimation of 21,000 points, Economic Times reported.
“We revise down our March 2012 Sensex and Nifty target to 19,000 (from 21,000 earlier) and 5,900 (from 6,500), UBS India Market Strategy report said.
“ Terming FII outflow as one of the biggest concerns of the Indian stock market,” Swiss banking major UBS said.
“In the absence of severe FII outflows, Indian markets should find support at current levels. However, if we see significant FII outflows, we believe Nifty/Sensex can correct further by 15-20% based on our bear case scenario. Inflow into Indian equities in 2010 was the highest among Asian markets and accounted for around 10% of the market capitalization, which means any significant FII reversal will result into heavy “vulnerability”, the bank stated.
Some global brokerages like CLSA and Morgan Stanley had also cut their year-end target for Sensex. CLSA had cut its year-end Sensex target to 18,200 from the earlier 19,500 while Morgan Stanley, reduced its Sensex target for 2011 by 15% to 18,850 from 22,750.
According to market experts, the tough days are ahead for the Indian equity market because at a time when developed economies are barely growing despite stimulus, India cannot remain insulated from the whole picture.
Sensex has lost 3.42% since Standard & amp, Poor’s downgraded the US government AAA sovereign credit rating on August 5, a move which raised question about the financial health of the United States economy.
UBS is a provider of financial services to private, corporate and institutional clients. It is present in all major financial centers and has offices in over 50 countries.
