Don't see monetary policy stance change till early 2018: UBS

Gautam Chhaochharia of UBS says global macro strategy team believes that a low risk-free yields regime is likely to persist. That suggests hunt for yield and hopes of growth recovery are both playing a role in driving Indian markets, he feels.

According to him, H2FY17 growth recovery hopes will likely be dampened though as 7th Pay Commission and monsoon impact is over-estimated by street.

He says while earnings recovery will continue mildly in FY17-18, policy stance change (fiscal/monetary loosening) is needed to meet street's optimistic estimates.

"Our base case is no policy stance change till early 2018 and upside scenario is one of boost by mid-2017. This gives us base case/upside/downside scenario for Nifty of 8,000/8,800/7,000 for 2016-end and 9,400/10,600/7,300 (preliminary) for 2017-end," Chhaochharia says.