Not So Fast on India Stock Rally as Profit Bar Too High, Says UBS
- March-quarter results can disappoint on cash ban impact
- FY18 consensus earnings estimates can see further cuts
This article is for subscribers only.
Gains that sent Indian stocks to a record are at risk of reversing as investors ignore the possibility of earnings disappointments in the wake of Narendra Modi’s currency clampdown, according to UBS Group AG.
Results for the March quarter have the “potential to surprise” as the full impact of the prime minister’s cash ban filters through, Gautam Chhaochharia, head of India research at UBS, said in an interview. “If the fourth quarter disappoints, which we think it will, then that is an important thing to watch out for.” His year-end target of 8,800 for the NSE Nifty 50 Index implies a drop of about 3 percent from Wednesday’s close.