The British lender also pegged Nifty at 6,700 by December, about 10 per cent from today's close, while it sees bond yields falling 80 basis points (0.8 per cent) to 7.3 per cent 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 per cent gain on the Nifty this year.
"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 per cent by the year-end," RBS Private Banking India chief investment officer Rajesh Cheruvu told reporters.
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, Mr Cheruvu said the revival of the domestic economy is likely in the current year.
"We hope the economy will grow 6.3 per cent in 2013 against an expected 5.3 per cent in 2012 due to the recent reform measures, and the possible monetary easing by the RBI," he said.
On the inflation front, the report said the price index is likely to be average at 5.4 per cent in FY'14 against an expected level of 7.6 per cent in FY'13.
He also pointed out that the recent measures like the partial diesel price deregulation would help in containing fiscal deficit, which will help taming inflation.