"We remain bullish on the equities in 2015. The growth recovery underway will likely sustain current valuations, especially as it starts manifesting in both macro and micro data points.
"Based on our top-down 15-18 per cent earnings forecasts for FY16 and FY17 and likely premium valuations of around 16 times one-year forward PE, our Nifty target for end-2015 is 9,600 points," the brokerage said in a report.
UBS said unlike the last three years, it expects consensus earnings growth estimates of over 15 per cent for FY16 and FY17.
However, on macro data, UBS expects only a gradual recovery of 5.5 per cent (GDP growth) for this fiscal and 5.8 per cent for FY16 as both the monetary and fiscal policy stances are still in consolidation mode.
Growth could accelerate to 6.5 per cent in FY17, driven by inflation moderation, lower nominal interest rates, policy support and balance-sheet repair. A massive uptick in the investment cycle would come only by FY17, UBS said.
Explaining its optimism on growth front, the report said the Modi administration has been enabling the "ease of doing business" through labour law amendments in addition to the push to attract investments.
"We expect more policy action next year, including further progress on the country's 'three arrows' - the Aadhaar cards, GST and dedicated freight/industrial corridors. Some reforms on cooking gas/urea, state-owned banks, coal/power, and land are also likely."
On 30 per cent fall in global crude prices since this fiscal, the report said Brent crude sustaining at USD 85 a barrel could mean a "USD 20 billion bounty for India, or 1 per cent of GDP, all other things being equal."