 "Equity markets around the world continue to be on a tear. The MSCI Global Equity Index is close to its lifetime highs, up a staggering 30 per cent over the last year. But it is not just equities; all asset classes have thrived in recent months.")
In a year that is poised to be one of macroeconomic turbulence, with significant policy shifts and global trade uncertainties, investors should consider asset allocation strategies to capitalise on gains in all asset classes while reducing risks, Aditya Birla Sun Life Mutual Fund (ABSL MF) said in its outlook for 2025.
The asset manager estimates fixed income investments to deliver around 8-9 per cent and precious metals like gold and silver are forecast to generate returns between 8-12 per cent. The fund house foresees equity market returns to moderate but still deliver 8-12 per cent returns.
"The key to success will lie in selective investing, focusing on companies with strong cash flows, prudent capital allocation, and a long-term track record of performance. While global uncertainty looms large, India's growth trajectory and structural story offer a solid foundation for those who approach the market with discipline and foresight," ABSL MF stated.
On sectors, the fund house said it is bullish on private banks, energy proxies, cement, and metals. "Business momentum is seen in consumer durables, IT, and capital goods. Conversely, real estate, defence/PSU stocks are viewed as sell-on-rise opportunities. With interest rates expected to decline, growth stocks may outperform value in the coming months," it said.
The fund house highlighted that corporate earnings growth will likely be aligned more closely with revenue growth after outpacing the top line in the past few years on account of margin expansion.
"Looking ahead, profit growth is expected to align more closely with revenue growth, with corporate earnings projected to grow in the low-to-mid teens over the next three years, particularly among BSE100 companies. Despite relatively low FPI positioning in India compared to other emerging markets, Indian households continue to embrace the ‘buy the dip’ mentality, driving market resilience,” the fund house said.
"Largecap valuations remain reasonable, with the Nifty 50 trading at just a 5 per cent premium to long term historical averages on a one-year forward PE basis, offering an attractive risk-reward proposition,” it added.
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