Reuters Market Eye - UBS sees possibility of downside to its FY16 year-end forecasts for CPI and 10-year rates of 5.6 percent and 6.5 percent respectively.
Expects continued restraint in India's fiscal and monetary policy, UBS analysts say in a report.
Says watch market interest rates, not just RBI. WPI-based real rates now at 6 percent.
Says financials most preferred sector as declining interest rates should support asset quality and earnings.
Lists LIC Housing Finance , Shriram Transport Finance Co , State Bank of India and IndusInd Bank as top picks.
Keeps Nifty target for end-2015 at 9,600.
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(Reporting by Abhishek Vishnoi)