As the Indian equity markets grapple with significant declines, investment experts are offering insights into navigating the turbulent landscape. Anirudh Garg from Invasset PMS has previously highlighted the importance of capital preservation, particularly as the BSE Sensex and NSE Nifty indices have dropped over 10% since their peaks in September 2024. Garg emphasizes focusing on stable sectors like Pharmaceuticals (Pharma) and Fast-Moving Consumer Goods (FMCG) for more reliable returns amidst the economic slowdown.
Adding to this perspective, Dhiraj Agarwal, Managing Director of Ambit Investment Managers, warns of a tough year ahead in 2025, citing a significant slowdown in earnings growth—the sharpest decline since the Covid-19 pandemic. Agarwal notes that earnings cuts have followed the September quarter, and while government spending post-elections may provide some relief, it is unlikely to offset the broader economic challenges. Revenue collections for the current fiscal year have merely met expectations, and food inflation is impacting consumer demand, further complicating the economic outlook.
Despite these challenges, Agarwal identifies potential opportunities within the IT sector, particularly among second-tier companies and those focused on the US market. He also sees promise in pharmaceuticals with US exposure. Additionally, segments such as air conditioners, jewelry, and selective retail are performing well, even as overall consumption weakens. The banking sector, while experiencing a slowdown in credit growth, shows resilience, suggesting that certain areas may still offer investment potential.
In a more optimistic view, Deepak Shenoy, founder and CEO of Capitalmind, predicts significant growth for India's mid and large-cap stocks as the economy expands. He notes that India's large-cap stocks are currently at mid-cap levels compared to the US market, indicating room for growth. Shenoy expresses optimism for sectors like defense-based manufacturing and financial infrastructure, anticipating a current account surplus in the next decade. He highlights recent mid-cap rallies and increased government capital expenditure as positive growth signals. Trading activity is expected to rise in January 2025 due to corporate results and upcoming budget announcements, although he warns of potential market corrections.
Garg's earlier insights align with Agarwal's analysis, as both emphasize the need for a cautious and balanced investment approach. The recent trend of Foreign Institutional Investors (FIIs) selling shares worth over Rs 1 lakh crore since October has raised concerns about market sentiment, but Garg believes that the return of FIIs could be possible within the next 6 to 12 months if macroeconomic indicators improve. Both experts underscore the importance of focusing on sectors that promise resilience and stability, particularly as the market navigates through these uncertain times.