India inflation, interest rate moderation may surprise in 2015 - UBS

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.

(Reporting by Abhishek Vishnoi)