Global brokerage UBS has cut its Nifty target for December this year to 8,400 from 9,200 amid concerns about a weak monsoon and slower-than-expected recovery in growth.
According to the financial services major, El Nino and monsoon forecasts are raising concerns for India's inflation and expectations in terms of pace of growth recovery need a further reset downwards, leading to continued near-term consolidation.
The India Meteorological Department (IMD) has downgraded its monsoon outlook for the June-September season to 88 per cent of the 50-year average.
Monsoon is considered below-normal if the rainfall range is 90-96 per cent of LPA and is considered deficient if it falls below 90 per cent.
However, private weather forecaster Skymet has rejected the official forecast of likely drought in India.
At present, the Nifty is hovering around 8,100-level.
(With inputs from Reuters)