Davies said: "Apart from the first 20 minutes I thought we were excellent, especially in the second half. We thoroughly deserved the result.
"When you are a team as young as we are it's about confidence, especially when you are fighting at the wrong end of the table."
Reading piled plenty of pressure on Forest goalkeeper Paul Smith but did not force him to make one save of significance after the break.
The home fans were annoyed by Forest's persistent time-wasting and it was a surprise that the fourth official only recommended five minutes of added time.
But Davies was adamant Reading were also guilty of gamesmanship by instructing their ballboys to favour the home side through the Multiball system.
He said: "The Multiball system is shambolic. I'm sorry to bang on about it but Reading are clearly the best at playing it. They shove it down your throat when you don't want it and don't give it to you when you do."
Davies also laughed off rumours he was ready to quit the City Ground after the club failed to bring in any transfer targets during January.
He said: "It's absolute nonsense. We still need to get some experienced players in but I'm in for the long haul and I'm sure we will get enough points to be safe."
The result was the latest in a series of setbacks for Steve Coppell's Reading side, who have now not won in four games and have scored just one goal in the last six.
They remain in third place and were buoyed by news that leaders Wolves had also lost but Coppell knows the fine early season form has disappeared.
Nonetheless he insisted the poor run needed to be put in perspective.
He said: "We got jittery and in the end it was a massive disappointment. We played well in the first half but we were poor in the second.
"I thought at half-time there was only going to be one winner after we played really well in the first half and created a number of opportunities.
"But this is not a crisis. It's only a crisis if you have got the Big C and you don't know whether tomorrow is going to come. This was just a game of football.
"We have still got 13 games to go and we are still in with a shout even if it's not going our way at the moment."