Even as we continue to see heightened volatility in the stock market ahead of Budget 2019, global firm UBS estimates that Nifty could go down to 10,000 by December, on the back of politics and policy uncertainty. "Our base case Nifty target for end-2019 is 10,000, implying a downside of 7%, while our upside\/downside scenarios also suggest unattractive risk-reward. While GDP growth may recover a bit, political and policy uncertainty keeps us cautious,"\u00a0Gautam Chhaochharia, Analyst, UBS Securities India said in a report. According to the firm, a\u00a0positive narrative on reforms and policies has supported rich valuations over the last 4 years despite earnings cuts. Further, the recent build-up of a populism narrative being only a pre-election phenomenon, is likely the market's expectation. Where exactly is the firm betting on, given such a scenario? "We analysed populism (direct doles with fiscal expansion) options into the elections, its role in political outcomes, and the likely policy\/reform stance for different governments' scenarios following May 2019. We are Overweight on IT, private banks and property, and remain Underweight on industrials\/infrastructure and small and mid-caps (SMIDs)," noted UBS in the report. Also read:\u00a0Jet Airways shares reverse losses, up 9% after SBI statement on resolution plan The firm notes that earnings have missed forecasts for a while, but this has been ignored by investors. Further,\u00a0 return to double-digit growth may be due to the normalisation of earnings for financials rather than a broadbased underlying pick-up. "We think 3 out of 4 key macro drivers remain missing: 1) fiscal\/monetary impulse; 2) a disappointing capex recovery; and 3) muted export growth. The credit cycle remains a silver lining, but sustainability depends on the above," the report points out. Decoding the factors behind the recent surge in inflows into Indian capital market, the firm said that benign liquidity has supported India\u2019s premium valuations and increased local flows into the equity market. Although liquidity has started to normalise post the tight phase in H218, easy money of the past three years is unlikely to be back in a hurry, UBS said. "Historical returns have supported retail flows historically, and this too is now less of a support. Our UBS-Financial Conditions Index also suggests waning support for flows and returns," noted the firm. Given such a forecast, UBS advises investors to take more stock-specific calls rather than sector-specific calls.