Here are few findings. I found in the XCode 6.2 release notes that Instrument is supported for WatchKit so we can very well use Intruments UIAutomation for automating Watch apps.
So I tried to use Appium 1.3.6 version and passed the Watch .app target in the MobileCapabilityType.APP. It successfully launched the watch simulator and also launched the app. But now when I am trying to find the elements using the accessibilityID then it is giving noSuchElementException.
I also tried to use Appium Inspector but it is not at showing the Watch screen in the Inspector Window. It just shows the Black iPhone Window.
I am still trying different things and keep you posted.