
Mint Primer | Happy New Year: How stocks may swing in 2025

Summary
- Return expectations moderated for 2024 due to the statistical effect of a high base, but mid-high single-digit returns are likely to be the norm for the blue-chip index here on, according to experts.
The Nifty 50 ended 2024 on a sobering note with just 9% returns, after 19% in 2023. In a year dotted with elections, erratic rains, global uncertainty and shrinking profits, investors found market-beating returns from certain themes. What’s in store this year?
So what’s the outlook for Nifty 50?
Return expectations moderated for 2024 due to the statistical effect of a high base, but mid-high single-digit returns are likely to be the norm for the blue-chip index here on, according to experts. As benefits from falling input costs continue to shrink (there’s usually a lag), India Inc.’s profitability may remain suppressed in 2025. With volume expansion likely to be the driver, HDFC Securities expects a low FY25 earnings base to support earnings growth in FY26. The brokerage expects large-cap stocks to offer better returns compared with mid- and small-caps, based on better earnings growth potential and reasonable valuations.
Will real estate stocks continue to do well?
The real estate sector is expected to continue its winning streak in 2025 and post healthy profit margins owing to the ongoing trend of premiumization and low supply of fresh properties. While residential sales saw a dip in 2024, they were offset by a 16% jump in the overall sales value due to heightened demand and increasing unit or home sizes. With an interest rate cut in sight in early FY26, Kotak Securities expects a re-rating for players in the mid or affordable housing segment. Market participants are betting on companies with strong launch pipelines and robust balance sheets this year.
Which sector is exciting investors the most?
A strong pickup in demand for consumer durables like air conditioners, refrigerators and washing machines led Blue Star and Voltas to offer 128% and 84%, respectively, returns last year. With white goods sales likely to remain strong along with support from the government through PLI schemes, experts are betting big on India’s electronics manufacturing services sector.
Read more: Indian QIPs hit a record high in 2024. Will the frenzy continue this year?
What about export-oriented sectors?
As the rupee hit multiple lows against the dollar last year, export-oriented sectors like IT and pharmaceuticals are expected to fetch strong dollar income. As global macroeconomic uncertainties continue to ease, Motilal Oswal Financial Services expects the outlook for technology spending to improve and expand beyond the BFSI segment in 2025. Pharma’s defensive appeal could continue. With profits from generic Revlimid sales in the US expected to peak in mid-2025, pharma firms may do well.
Will banks finally have their moment in 2025?
After a muted show last year, bank stocks are positioning for a rebound on the back of monetary policy easing. Elevated deposit costs and sluggish base growth weighed heavily on net interest margins (NIM) for both public and private banks throughout 2024. Even though NIMs will fall further before normalizing in a falling interest rate scenario, only banks that have a strong deposit base as well as superior credit extension capabilities are poised to take full advantage of the upcoming credit cycle in 2025.