Mumbai: Equity markets will turn attractive and bonds and gold are likely to lose their sheen this year as domestic growth revives following the recent reforms and the improving global environment, says British lender Royal Bank of Scotland (RBS) in a report.

The British lender also pegged Nifty at 6,700 by December, about 10 percent from January 22 close, while it sees bond yields falling 80 basis points (0.8 per cent) to 7.3 percent by the end of the year.

However, its Nifty target is a tad below others’ estimates with most of banks and brokerages pegging a 17 percent gain on the Nifty this year.

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“We expect that equity markets to perform well in this calendar year with the Nifty touching 6,700 level by the end of the year. As far as bonds are concerned, the benchmark 10-year bond yield should fall by 80 basis points to 7.3 percent by the year-end,” RBS Private Banking India chief investment officer Rajesh Cheruvu said here.

However, the report pointed out that a lot depends on the forthcoming budget in the backdrop of the forthcoming general elections slated for early 2014.

He also said the demand for gold may come down as the global economic environment improves this year.

Referring to the real economy, Cheruvu said the revival of the domestic economy is likely in the current year. “We hope the economy will grow 6.3 percent in 2013 against an expected 5.3 percent in 2012 due to the recent reform measures, and the possible monetary easing by RBI,” he said.

On the inflation front, the report said the price index is likely to be average at 5.4 percent in FY14, against an expected level of 7.6 percent in FY13.

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