Expert View: Capital Goods, Defence, among key sectors to invest in 2025, says Himani Shah of Alchemy Capital | Stock Market News
Expert View: In a recent interview with Mint, Himani Shah, Co-fund Manager at Alchemy Capital Management, discussed potential year-end projections for Nifty 50, expectations from the new Reserve Bank of India (RBI) governor Sanjay Malhotra, sectors likely to gain attention in 2025, possible US Federal rate reductions, and various other catalysts that could impact the Indian stock market.
Edited excerpts:
What is your final target for the Nifty 50 in 2024? What major factors drove the Indian stock market in 2024?
Nifty 50 should close the year around 24,600 to 25,100, in our view, as Bloomberg estimates for Nifty 50 EPS for CY2024 is ~1070, at PE of 23X-23.5X would be around 24,600-25,100 (10-year median is 23.5 as per screener.com). Most part of the year was driven by a focus on interest rates and also elections (central, state and global).The 2024 Indian general election created political uncertainty, which typically affects market volatility. However, there was considerable variance across sectors, with new-age e-commerce, consumer durables (especially electronics manufacturing services (EMS)), and capital goods, while sectors like industrial gases and retailing faced declines due to demand constraints and rising costs. The real estate sector rebounded strongly, supported by government initiatives and increased urbanization.
What do you expect from the new RBI Governor? Can we see a shift in monetary policy?
The New RBI Governor will need to balance inflation control with economic growth. With inflation remaining a concern, any rate cuts will be carefully considered. There is an expectation that Sanjay Malhotra will focus on measures to support India’s economic growth, especially given the global economic uncertainties. Overall, while a shift towards a more accommodative monetary policy is anticipated, it will be a delicate balancing act to address inflation, growth, and currency stability.
Which sectors would you suggest investing in for 2025?
Largely we believe the government’s focus on capex will continue, and we could see private capex picking up in 2025. Sectors such as capital goods, industrials, defence, and EMS, would be the key domestic stories that could continue, along with some new sectors such as IT and pharma, returning to favour.
What key triggers will move the Indian stock market in 2025?
Important triggers to watch in 2025 would be interest rates, the Union Budget, earnings growth now on a higher base, and private capex. As long as we see strong earnings growth, we could see market momentum to continue.
Is a 25 bps Fed rate cut discounted? Will it impact the Indian market significantly?
The rate cut isn’t discounted, in our view. However, a 25-bps rate cut may not impact the market significantly.
What should we expect from the forthcoming Budget? Which sectors and stocks do you suggest we concentrate on leading up to the Budget?
We would continue to believe that the government would be focused on capital expenditure, which would anyway help consumption pick up. We thus believe quality growth stocks from sectors such as capital goods, power and defence can be on the watchlist.
Amid the anticipation of Trump’s proposed tariffs on imports, should we brace for a major negative impact on the Indian market in thecomingyear?
As of 2023, India stood a distant ninth in terms of overall import partners in the US, accounting for only 2.7% of their overall import volumes. Mexico, Canada, and China together comprised a staggering 43%, with Mexico alone accounting for 15.4%. (Haitong Research). With imminent supply shifts, India has the potential to grow its share significantly. Sectors such as EMS, textiles, pharma could mostly benefit.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
