 "Equity Mutual Fund")
Significant valuation expansion seems unlikely in 2025 amid near-term growth challenges, likely muted inflows from foreign institutional investors (FIIs), and subdued earnings expectations, Axis Mutual Fund (MF) said in its outlook, while asserting that it will be a year of stock picking across marketcaps.
The fund house said the consolidation phase may continue for select sectors, especially those that have outperformed recently like real estate, pharmaceuticals, information technology, automobiles, and capital goods.
"Going forward, market performance could be influenced by earnings growth and absolute valuations," it said.
"In contrast, sectors with relatively lower earnings growth, such as FMCG, lenders, energy, and metals, are not as expensive compared with their pre-Covid valuations," it added.
According to the fund house, rising geopolitical tensions can be a risk for the equity market as it could hinder the free flow of goods, services, capital, and manpower, distorting demand and supply dynamics and leading to imported inflation and a weak currency. The other factor that can add pressure is the supply of new equity issuance.
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 "Automobile investments")
 "technicals")
 "Market, BSE, NSE, NIfty, Stock Market, investment")
 "Stock markets, Indian markets")
 "Market, Stock market, NSE, National Stock Exchange")
"Initial public offering (IPO) pipeline for the second half of the ongoing financial year is nearly 3 times the amount raised in the first half with 91 companies looking to list and in aggregate raise $17 billion. Another 70 listed companies in recent weeks have taken board approvals to raise in aggregate $16 billion of equity through qualified institutional placements (QIPs)," it said.
Earnings growth likely to be a key driver
Even as earnings growth has decelerated in recent quarters, India’s medium-to-long-term outlook remains robust, driven by strong macro fundamentals, deleveraged corporate balance sheets, robust asset quality, fiscal discipline, favourable demographics, digitisation, and rising income levels, Mirae Asset Mutual Fund said in its outlook for 2025.
The fund house also highlighted other reasons like reasonable household debt levels.
"We remain constructive on equities from a medium-term perspective driven by strong profitability and free cash flows. Earnings growth may be a key driver of returns in 2025. Given that valuations are trading at a premium and there is froth in certain segments of the market, bottom-up stock selection will be important," the fund house said.
The asset manager is especially constructive on banking and financial services stocks, owing to their reasonable valuations and higher return ratios — ROE (return on equity) and ROA (return on assets). "We are also hopeful of revival in consumption and positive on manufacturing, given the government’s thrust and China-Plus-One strategy," it added.
The fund house said that investors should not expect equity returns similar to that seen in the previous three years and recommended taking a staggered approach in funds across marketcap strategies and hybrid funds.
On the fixed-income side, Mirae Asset Mutual Fund sees the possibility of another good year. "With spreads over the sovereign yield curve remaining relatively attractive and expectations of rate cuts going forward, conditions remain ripe for possibly better returns for fixed income investors during 2025," it said.
 "Zee MD & CEO Punit Goenka")
 "Wall Street")
 "Indian markets")
 "Sensex, Nifty, stock brokers")
 "The number of active investors on the National Stock Exchange (NSE) have jumped 44 per cent over the past one year to 47.9 million at the end of September 2024. The surge in active clients is underpinned by the rally in the markets, with the Nifty 50")
