Read the below mentioned details to know where you can invest in 2025
Table of Contents
Global Market Outlook - 2025
Will the US Trump the Global Economy?
In 2024, global equity markets were shaped by two dominant themes: elections and inflation. Major elections across 64 countries, including the US, India, and the European Union, led to policy shifts with wide-reaching economic implications. Inflation, a significant concern in recent years, showed signs of cooling but at varying paces across countries. These factors, combined, created a dynamic market environment that will influence global trends in 2025. Key drivers like technological advancements and expanding AI adoption will play an important role, while geopolitical tensions, particularly in West Asia and the ongoing Russia-Ukraine conflict, add volatility to commodities like crude oil and precious metals.
The US economy displayed resilience, growing by 2.9% in 2024 despite high interest rates and unemployment. Growth was fueled by strong consumer spending, cooling inflation, and robust productivity. However, challenges such as rising import costs and slowing immigration flows remain. The new Trump administration is expected to implement fiscal and regulatory shifts, including higher tariffs on China and potential tax cuts, which could bolster financial conditions and demand. In Europe, growth exceeded expectations, supported by strong consumer spending and monetary easing, though challenges from inflation, restrictive fiscal policies, and fragile financial institutions persist. Meanwhile, China’s uneven growth struggled with a property market downturn and weak consumption, but fiscal stimulus and policy adjustments could provide some relief in 2025.
Looking ahead to 2025, markets are expected to remain volatile, driven by geopolitical risks and policy changes. Equities could see improved performance as corporate earnings benefit from lower capital costs. However, high leverage and prolonged high interest rates may pose risks of financial instability. Investors should adopt a flexible strategy, monitor economic indicators closely, and diversify across asset classes to navigate uncertainties and seize emerging opportunities in the evolving global landscape.
Indian Market Outlook - 2025
India to Drive in Fast Lane
Indian markets ended 2024 on a positive note, with the Nifty gaining approximately 10% year-to-date and achieving an all-time high of 26,277 in September. Despite challenges like national elections, slower credit growth, and seasonal disruptions, the Indian economy remained resilient, retaining its position as the fastest-growing major economy. Turbulence in the last months of the year, driven by record foreign investor outflows, was offset by BJP’s state election victories and a 50bps CRR cut by the RBI. These developments renewed optimism for government spending and favorable policies. Looking ahead to 2025, easing inflation, RBI rate cuts, and trade agreements with the UK and Oman are expected to support strong growth and improved corporate earnings, strengthening India’s position as a key investment destination.
India’s structural growth story continues to be fueled by reforms in taxation, infrastructure, and social inclusion, positioning the country as a competitive global manufacturing hub. Initiatives like the Production Linked Incentive (PLI) scheme, improvements in renewable energy, and infrastructure development enhance India’s attractiveness for supply chain diversification under “China+1” and “Europe+1” strategies. The growing digital ecosystem and advancements in AI are driving efficiency and innovation across industries like healthcare and logistics. Emerging sectors such as electric vehicles, green hydrogen, and advanced batteries present exciting growth opportunities. With supportive fiscal and monetary policies, including potential repo rate cuts and GST reductions, India is well-placed to sustain economic momentum in 2025.
While market sentiment remains optimistic, investors should adopt a selective approach. Large-cap stocks currently offer more stability compared to mid- and small-cap segments. Risks from global economic slowdowns, crude oil price volatility, and geopolitical tensions persist. However, factors like higher rural spending, a strong wedding season, and government initiatives are expected to drive recovery in the latter half of FY25, making the year a promising one for Indian markets.
Indian Sector Outlook - 2025
Automobiles - Industry navigates speedbumps with rural resurgence
The Indian automobile industry had a mixed performance in 2024. While the year began positively with strong demand and new launches, challenges like general elections, inventory concerns, and weak monsoons dampened sentiment mid-year. The passenger vehicle (PV) segment grew in high single digits, driven by SUVs and new models. However, entry-level cars struggled, with some recovery expected in 2025 due to improved rural demand and rising incomes. SUVs will remain the dominant choice in the product mix. The electric vehicle (EV) segment underwent notable changes with the introduction of the PM E-Drive Scheme replacing FAME-II. Although sales grew year-on-year, the pace slowed due to anticipatory buying. EVs have a positive outlook, supported by better battery technology and infrastructure. Two-wheelers (2Ws) continued strong growth, aided by premium models and rural demand. Commercial vehicles (CVs) are expected to perform well in 2025, supported by government projects and infrastructure demand. The overall outlook for 2025 remains cautiously optimistic, with growth led by rural recovery, premiumization, and new launches.
Banking - Asset quality to take center stage
In 2024, banks faced challenges like worsening asset quality and shrinking net interest margins. Looking ahead to 2025, the focus is expected to shift from credit growth to managing stressed assets. Stress in the microfinance segment was significant in 2024, with potential ripple effects on credit cards and retail loans. Microfinance bad loan ratios are expected to remain in double digits in FY25. Private banks are better positioned than PSU banks, as they have restructured loan books and prepared for credit challenges with excess provisions. This could stabilize credit costs and potentially lead to provision reversals, boosting profitability. With expected RBI rate cuts, banks with fixed-rate lending portfolios will benefit from stable income. Additionally, banks with strong CASA ratios and granular deposit bases will remain attractive, avoiding deposit outflows to competitors offering better rates. Overall, credit growth is expected to rise in double digits in 2025, outpacing deposit growth.
Cement - Worst is behind us
The cement sector faced challenges in recent quarters due to the general elections, reduced construction activity from a heatwave, and the monsoon’s seasonal impact on demand. However, with these factors largely behind us, the sector is poised for growth. Robust real estate activity and increased government spending on infrastructure are expected to drive annual cement production to 550-600 million tonnes. Capacity additions are likely to grow by 29-32 million MTPA in 2025, led by expansions in the eastern and central regions. Government initiatives in railroads, logistics, and affordable housing will further boost construction. Rural housing demand, supported by housing schemes and affordability, will also remain strong. Export opportunities to regions like the Middle East and Africa are growing, particularly from plants near ports like Gujarat and Visakhapatnam. Revenue growth in 2025 is expected in high single digits, with softening costs improving margins. Foreign players remain invested, reflecting steady demand and profitability.
Chemicals - At the foothill of an upcycle
The chemical sector faced challenges in recent quarters due to supply chain disruptions, pricing pressures, and shifting market conditions. However, 2025 is expected to be more promising as destocking worries ease and demand recovers across most products. Factors like volatile crude oil prices, high logistics costs, and demand-supply mismatches are anticipated to stabilize, boosting sector performance. Many chemical companies are seeing improved utilization levels and demand from end-user industries, with financial recovery expected to begin in 2025. The sector is projected to grow by 8-10%, driven by India’s increasing importance in global supply chains. Companies are focusing on R&D, adopting advanced chemistries, and expanding product portfolios to stay competitive. India’s backward integration and niche offerings position it to capture market share from China and Europe. Ongoing investments of ₹116 billion in capacity expansions and innovations reflect the sector’s long-term growth potential, despite short-term challenges.
FMCG - Urban consumers pass the baton to rural
India’s FMCG sector is poised for strong growth in 2025, driven by a recovery in rural demand. After a challenging 2024 marked by stiff competition, fluctuating raw material prices, and price cuts, the sector is now set to perform better, particularly in rural areas. Factors like a good monsoon, higher crop prices, and better digital access are boosting rural consumer spending. Government initiatives aimed at rural development further support this growth. Quick commerce platforms like Blinkit, Zepto, and Swiggy Instamart are reshaping the FMCG landscape with faster deliveries and affordable prices. These platforms, along with e-commerce and digital payments, are making FMCG products more accessible in underserved areas. Traditional companies are collaborating with these platforms to stay competitive. Despite challenges like inflation and rising costs, the sector expects around 5-6% volume growth in 2025, driven by rural demand and stable urban consumption. Companies must remain adaptable to thrive in a competitive and evolving market.
Information Technology - Easing global monetary policy a shot in the arm
In 2024, Indian IT companies demonstrated resilience despite global challenges, supported by fresh deal ramp-ups and financial improvements. As 2025 begins, the sector is set for a positive demand environment, aided by falling inflation and interest rate cuts by central banks. Revenue forecasts for FY25 have been revised upward, reflecting growing optimism. Companies are focusing on improving margins through better workforce structures, higher utilization, and efficiency measures, while stabilizing attrition rates will further boost profitability. Strong performance is expected across sectors, particularly in BFSI, as clients prioritize high-value IT projects. Deal wins are likely to grow, supported by increased corporate discretionary spending and better deal execution. The sector’s outlook remains positive, driven by margin improvements, recovery in key verticals, and increased adoption of GenAI-based solutions. However, challenges like the US Fed’s cautious rate policy and trade uncertainties under Trump persist. Moderate growth is expected in early FY25, with a rebound later in the year.
Pharmaceuticals - Sun rises in the West
The pharmaceutical sector has shown significant improvement recently, driven by better performance in the US generics market, strong results in branded markets, and lower raw material costs. These factors have boosted earnings for Indian pharma companies despite global challenges. In 2025, the sector is expected to grow by 12-15%, supported by new product launches, increased volumes, and rising demand for generics and branded drugs. Pharma companies are expanding into chronic therapies, introducing new products, and exploring emerging therapeutic areas. The US Bio Secure Act is expected to benefit India’s API CDMO industry as global companies seek alternatives to China. With robust capital investments, a strong USFDA compliance record, and advanced technologies, the Indian CDMO sector is poised for growth. Domestic-focused companies are likely to grow 8-10%, driven by chronic therapies and cost optimization, while US-focused players will benefit from drug shortages, specialty products, and niche molecules, ensuring steady growth and financial stability.
Telecommunications - Will Big Boys Be Challenged?
The Indian telecom industry is set for strong revenue growth in 2025, driven by the full impact of the July 2024 tariff hike, reduced subscriber churn, and increased migration from 2G to 4G networks. Higher adoption of postpaid plans and growing data and voice usage are expected to further boost ARPUs (Average Revenue Per User). With the sector gradually moving towards a duopoly dominated by Bharti Airtel and Reliance Jio, both companies may take steps to enhance profitability, supported by their earlier heavy investments in infrastructure and 5G rollout. Reliance Jio’s anticipated IPO in 2025 could be a major milestone, reflecting its business scale. Meanwhile, challenges loom from competitors like state-run BSNL, which is expanding its 4G network without raising tariffs. Satellite broadband players, including Elon Musk’s Starlink, could also reshape the market. While 2024 was highly successful for Airtel and Jio, investors must watch the evolving dynamics carefully.
Our Top 5 New Year Picks for 2025
Ambuja Cement - Buy
Adani Group is driving growth in its cement business through expansion and improved efficiency. Ambuja Cements Ltd. (ACL) plans to complete a 4 MTPA clinker unit in Chhattisgarh by Q4FY25 and add grinding units in West Bengal, Jharkhand, and Uttar Pradesh, increasing capacity to 118 million tons by FY26 and 140 million tons by FY28. Operational costs dropped by 4% in Q2FY25 due to better fuel management, green energy use, and optimized transport costs.
Strategic acquisitions have boosted ACL’s market share from 15% to a projected 20% by FY28. Recent acquisitions include stakes in Sanghi Industries, Penna Cement, and Orient Cement, raising total capacity to 97.4 MTPA and improving efficiency. Strong infrastructure demand, housing projects like Pradhan Mantri Awas Yojana, and rising consumption are expected to drive 4-5% industry growth in FY25. With no debt and Rs. 10,135 crores in cash reserves, ACL is positioned for further growth. The stock is valued at a PE of 47x FY25 earnings, targeting Rs. 654 per share, a 20% potential upside.
Bajaj Finance Ltd. - Buy
Bajaj Finance (BFL) is transitioning into a FINAI company by integrating AI into its operations to improve customer engagement, revenue, and cost efficiency. The company plans to expand by acquiring 100 million new customers through strategic partnerships, growing its MSME financing, and focusing on green finance like solar and EV products. By deploying Generative AI across 29 processes, BFL expects to save ₹150 crores annually by FY26.
BFL has maintained strong AUM growth, reporting a 28.8% YoY increase as of September 2024 and targeting 26-28% growth in FY25. New business segments, including personal loans, gold loans, and two-wheeler financing, are expected to contribute more significantly to growth. Despite challenges in rural and SME segments, profitability remains robust at 22-23% in the medium term. With a focus on diversification and steady profitability, we recommend a Buy with a target price of ₹8,050, offering a 17% upside over the next 12 months.
Hero MotoCorp Ltd. - Buy
Hero MotoCorp is set to benefit from strong rural demand, boosted by the marriage season, festive momentum, and its popular models like Xtreme 125cc and Super Splendor, which are gaining traction in semi-urban and rural areas. The company’s strategic focus on premium models through Premia stores targets urban buyers, while its growing electric vehicle (EV) portfolio, with plans to launch new e-scooters across price points in the next six months, strengthens its market presence.
Hero’s partnership with Harley-Davidson has enhanced its premium offerings, including the Maverick 440, Karizma XMR, and HD X440. Its diversification into scooters and EVs, including collaborations with Zero Motorcycles, underscores its focus on growth. With a strong product portfolio and expanded manufacturing capacity across eight units, Hero is well-positioned to meet rising demand. Valued at a P/E multiple of 21x FY25E earnings, we recommend a Buy with a target price of ₹5,081, offering a 21% upside.
State Bank of India - Buy
State Bank of India (SBI) is set to maintain steady growth and profitability in the near term, supported by strong fundamentals. In Q2 FY25, the bank reported robust credit growth of 14.93% YoY, with stable net interest margins (NIM) expected to continue into 2025. Even with anticipated rate cuts, the impact on margins will be minimal due to effective strategies, including a large portion of loans tied to MCLR, which are less sensitive to immediate rate changes. Loan growth is projected at 15% for FY25, driven by strong corporate demand.
Asset quality remains stable, with improved GNPA/NNPA ratios at 2.1% and 0.5%, supported by lower slippages and strong recoveries. SBI’s retail book is solid, mainly catering to salaried customers. With a strong capital base and efficient management, SBI is well-positioned for sustained growth. We recommend a Buy with a target price of ₹940, offering a 19% upside.
Sunteck Realty Ltd. - Buy
Sunteck Realty Limited (SRL) is positioned for growth, fueled by rising housing demand and innovative strategies in the Mumbai Metropolitan Region (MMR). Its proactive land acquisition through government tenders, JDAs, and outright purchases ensures a steady supply at competitive costs. An asset-light model in areas like Naigaon and Borivali enables rapid scaling with low financial risk. The company’s luxury projects, such as Signature Island and Signia Isle, along with commercial developments, strengthen its portfolio.
SRL is diversifying into commercial real estate, successfully leasing projects like Sunteck Icon and BKC 51 for ₹350 million annual revenue. A new 1 million sq. ft. office project in ODC is expected to generate ₹2-2.5 billion in rentals, providing steady income. With strong financials, ₹1,026 crores in pre-sales (H1FY24), and upcoming projects like Sunteck Ultra World and Bandra Bandstand redevelopment, SRL targets significant growth. We recommend a Buy with a target price of ₹602, indicating a 20% upside.
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