In an interview with ETMarkets, Kapoor said: “Private banks, selects PSU banks, Healthcare providers, select Auto OEMs and some insurance companies appears to have a good mix of valuations, steady earnings and probability of decent growth outcomes are key themes for 2025,” Edited excerpts:
Geopolitical concerns and political uncertainty in some of the countries weighed on markets in early December. What is your take on the markets?
Nuclear, Chemical and Biological concern are ever present and are usually never priced in because of how uncertain the outcomes are. It is tough to understand how much of current geopolitical concerns are in the price or are weighing on how investors perceive their investments. The key is that none of these events, so far, has caused any disruptions to earnings of domestic Indian businesses and may have had only limited impact on exports and those with global value chains. Hence, it is important to focus on valuations, earnings and the quality of those earning. These are the parameters which matter and we are witnessing some deterioration in all three parameters. The Nifty50 should hopefully close the year with double-digit gains. How do you see markets in 2025?
I don’t have the ability to judge the market movement in CY2025. On the whole, Indian equities, when judged by Nifty 50 Index, is trading close to ninetieth (90%ile) percentile of its own valuation history. Which means stocks are not cheap. Broader markets are even more expensive. Sales growth has been in mid-single digits for 6 quarters and profit growth has begun to decelerate. These represent risks to Indian equities which have seen an excellent performance over the last 4 years.
What will drive markets in 2025? Factors which investors should watch out for?
Earnings growth, margins for wide variety of businesses and the most crucial – the margin of safety of investors new investments that are put into various assets incrementally in 2025 and beyond.
What are your expectations from Union Budget 2025 – the first Budget of Modi 3.0?
Budget is an exercise in accounting. The union government has repeatedly shown that policy making can happen outside of the budget. Hence we don’t carry any significant expectations. The best outcome would be continuity in policy making through steady capex spend and probably no significant changes in tax rates.
Which sectors look attractive for investment in 2025 where risk-to-reward is favourable after recent correction?
Private banks, selects PSU banks, Healthcare providers, select Auto OEMs and some insurance companies appears to have a good mix of valuations, steady earnings and probability of decent growth outcomes.
Any sectors in which investors can look to pare their weightage in the portfolio?
Sectors like industrials, Consumer tech and particular businesses where valuations have expanded beyond any historical precedent are areas where investors can tone down their exposure and expectations.
What is your take on Gold & Silver for the year 2025? Should investors increase their proportion in the new year and what is the ideal weightage?
Precious metals are underpriced. The global debt binge and central banks penchant for Gold continues to keep Gold as an attractive portfolio diversifier. Marginal currency depreciation has also helped precious metals. It is prudent to keep Gold and Silver in the mix.
Which theme will work best – growth or value in 2025?
The themes which always works in conservatism in expectations. If investors build sufficient buffers in their portfolio and wait patiently for investments to have sizable margin of safety, the factor trends will take care of themselves.
For first-time investors – how should they go about constructing the portfolio in 2025?
Keep expectations low and focus on saving as much as possible. Once savings are channelized into a diversified investment portfolio and held for a very long period of time, compounding can do its job.
Opt to choose allocations methods which give you multi asset diversification. Try to start with a portfolio which has sufficient exposure to debt and precious metals.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)