The investment bank has said China is the better bet and India was unlikely to see big downside surprises on inflation and hence no aggressive rate cuts.
“Our preference here is now China rather than India," Reuters has reported quoting the UBS report.
Over the last few months, foreign investors have continued to express worry over the Indian markets. Rising fiscal deficit and current account deficit have been causes of concern.
Apart from these foreign investors are also increasingly worried over a complete policy paralysis at the centre, apart from rising inflation.
The GAAR tax provisions have all compounded problems further. Over the last one week or so, FII inflows into the Indian markets have slowed considerably. The rupee has depreciated and has now crossed the 52 per dollar mark.