The glory days of easy double-digit returns are fading into the rearview mirror as Indian stocks toil almost 10% below all-time highs. Analysts paint a sobering picture: a rocky dip, a modest rise, and a flat finish at best.
Keeping it real: India’s stock market is stuck in neutral. Economic growth is slowing, corporate earnings are wobbling, and the Adani saga is still siphoning off the momentum from years of bull runs.
Add to that the foreign investors ditching India for China’s freshly stimulated markets, and you’ve got a cocktail no one’s rushing to drink.
And let’s talk price tags — Indian stocks are trading at a frothy 21x earnings, a 70% premium to their emerging market peers. Value? Not so much.
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Downfalls, reversals, repeat
Indian stocks are in a “critical phase” where investors are likely to witness sharp downfalls, reversals and bounce back over the next few months, says Robins Joseph, a Sebi-registered research analyst at myguide2wealth.
Largely thanks to India’s latest GDP miss (a weak 5.4%).
Though economists are positive about a revival, calling the slump one-off and cyclical, Dalal Street isn’t buying it (yet).
Signals like sagging car sales, stagnant wages, and rising inflation aren’t exactly painting a revival story. A rate cut from the RBI in February might ease the pain, but don’t hold your breath.
Expect a relief rally around New Year’s but know that earnings and economic readings will haunt Indian markets for quarters to come, Amit Goel, chief global strategist at Pace 360, tells MONIIFY.
Read more: India’s Sensex is on a record run. But can it last?
Out of steam
Missing corporate earnings is India’s Achilles heel. Barring a few companies, overall earnings haven’t picked up for the past few quarters.
Nifty 50 companies posted a dismal 4% growth last quarter, according to Motilal Oswal, down from a blistering 36% the year before, as per the NSE.
While Mahindra & Mahindra in the auto sector, ITC in FMCG and most public sector banks have done well, the broader market is struggling to keep up.
And then there’s Donald Trump. The former president’s return to the White House is spooking emerging markets, with only 11% of fund managers in a recent Bank of America poll favoring them for 2025 — down from 21% just a month ago.
Trump’s tough talk on tariffs includes India, which he’s called a “big abuser” of trade rules. The hope that India might benefit from his China fixation? Forget it.
Read more: Mahindra’s a rare bright spark in sluggish auto market
Where to bet?
Still, it’s not all doom and gloom. While betting on all things India is kind of in question, here’s our quick guide based on interviews with various experts.
- Neelesh Surana, CIO at Mirae Asset, suggests focusing on banks and NBFCs with reasonable valuations noting that potential rate cuts could ignite the sector. (Think SBI, Axis Bank, and Bank of Baroda)
- Travel, Tech, and Pharma: Vipin Dixena, founder of Turtle Trading Desk, expects travel and tourism, technology, pharma, and discretionary consumption to shine in 2025. Stocks to watch: International Travel House, Wipro, and Zydus Lifesciences.
- Consumer and Logistics: Jefferies highlights Colgate, Jubilant FoodWorks, Voltas, Delhivery, and Nippon Life as top picks, issuing “buy” ratings across these sectors.
Or as we said here, consider the WisdomTree India Earnings Fund. It’s got companies that have the best earnings profile –– we’re talking consistent profits and strong cashflow. This group has outperformed the index’s 9% average gain by 2.5 percentage points over the last 10 years.
Read more: Indian luxury hotels soar as travel and weddings boom
Time it right
Or you could just ride the dips. Joseph says that every correction in the coming year should be taken as an opportunity to buy quality high-growth stocks.
“Every time Nifty 50’s P/E drops below 20 it becomes an attractive zone to buy,” says Abhinav Sonkar, a quant fund manager for 1point6.in and angel investor.
Bottom line: India’s market isn’t dead — it’s just catching its breath. Keep an eye on valuations, stick to quality, and don’t expect a free ride.
Edited by Ankush Chibber. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
