Top ten stocks which can give up to 44% return in next 12 months

NEW DELHI: UBS, which sees the Nifty hitting 9600 levels by the 2015-end, is overweight on banks (private/PSU), oil and gas, power, telecom and media stocks.

Indian financials is their most preferred ‘overweight’ sector over the next 18 months as lower inflation and declining rates should support earnings growth and asset quality. Valuations remain attractive versus the historical trading range.

They expect private sector banks to gain market share due to their expanding reach, better client offerings and strong capitalisation ratios. State-owned (SOE) banks could benefit in the near term from lower credit costs, though capitalisation levels are a concern.

They are also positive on oil & gas sector. The key reforms rolled-out recently – gas price revision, diesel price deregulation, and potential steps to lower LPG subsidies -- have cleared a lot of policy uncertainties. UBS expects healthy earnings growth visibility for the sector over the next two to three years.




Here is a list of most preferred and least preferred stocks by UBS with a time-frame of 12 months:



The global investment bank is underweight on auto (2 wheeler) and consumer staples, while it is neutral on autos (four wheeler) and the cement sector.

UBS has turned ‘underweight’ to ‘neutral’ on consumer discretionary - given their view of a gradual recovery. They expect discretionary to recover moderately, more so in the second half of 2015, and UBS prefers it to consumer staples.

They turned from neutral to UW on IT Services. Revenue momentum seems to be slowing, with even stronger vendors such as TCS and HCL Technologies reporting softer than-expected QoQ growth in Q2 FY15.

UBS expects concerns of a sector-wide slowdown to increase. They believe that the demand cycle could be slower than expected and 2015 IT budgets would be more cautious than the street’s current expectations, said the report.

They have turned from UW to neutral on pharmaceuticals. UBS had previously preferred IT services as a potential beneficiary of the rupee depreciation, but with a weaker outlook for IT now, their preferences have reversed.

UBS has also turned from OW to neutral on small and midcaps (SMIDs) - SMIDs had rallied after the elections on hopes that the growth recovery will accelerate. Their valuations relative to the large caps are now near historical highs.