UBS Global AG on Sunday predicted that NSE Nifty 50 will drop to 15,500 by June 2022, Bloomberg reported. The prediction comes in the wake of China’s regulation on cryptocurrencies, which may affect Indian stock prices.
Last week Nifty had crossed the 16k mark, despite COVID-19 restrictions and lockdown.
“The perception of risks in China has gone up and may lead investors to take out money and deploy it into other emerging markets,” Sunil Tirumalai, head of India strategy, told Bloomberg “However, given the expensive valuations for India, this money may flow into other markets.”
According to Bloomberg, while the rest of the world gasped at a series of blow-ups in Chinese equities in recent weeks, India’s $3.1 trillion stock market extended what’s already one of the best rallies since the March 2020 pandemic lows.
At present Nifty is trading at 21.3 times the estimated 12-month earnings, which is much higher than the last five year’s average.
“With the possibility of a third wave and the markets at a much higher level now, the room for worry is so much more,” Tirumalai added.
According to CNBC, more than 65% of the world’s bitcoin mining happened in China. In May, the Chinese government called for a crackdown on cryptocurrencies trading and bitcoin mining. This subsequently led to traders and miners migrating to other markets, a process is also known as “the great mining migration.”