A positive trend was seen in the stock market on the first day of the January series. Nifty gained 0.96% and Sensex gained 0.84% in the week ending December 27. This week proved to be good for investors. Dhaval Gada, Fund Manager, DSP Mutual Fund, shares his outlook on the market performance in 2024 and prospects for 2025.
2024: Market performance and sector rotation
According to Dhaval Gada, the market journey in 2024 was full of ups and downs.
- Annualized Returns: Nifty gave an annualized return of 13%.
- Sector Rotation:
- First 6 months: Cyclical and industrial sectors picked up, leading to good wealth creation.
- Last 6 months: Amidst ups and downs, there was growth in utilities, telecom sector and good returns in mid and small caps.
2025: Market Outlook
Volatility: There may be some volatility in the market in 2025.
- Earning Growth:
Earnings growth of 9% is expected in the new year. - GDP growth:
India’s GDP growth is likely to be 7% in 2025. - risk:
- Geopolitical tensions.
- Weakness of the domestic economy.
- Slow economic activity in September quarter.
Investment Strategy:
- Maintain a balance of largecap and smallcap in the portfolio.
- Focus on diversification.
Sector performance
FMCG Sector:
- Challenges:
Lack of demand and business model problems. - Investment Approach:
At present there is no earning stability in this sector.
Pharma Sector:
- American pharmaceutical companies:
Good recovery and stable domestic business. - Valuation:
Neither too bullish, nor too bearish. - Investment Strategy:
Focus on active management and fair valuation.
Insurance Sector:
- past performance:
The business model of life insurance remained strong. - Long Term Outlook:
7-8% CAGR returns in 3 years. - Investment Strategy:
The insurance sector offers better opportunities for the long term.
DSP Banking and Finance Services Fund Strategy
- Objective of the Fund:
Generating better returns by investing in banks and NBFCs. - Focus Area:
- Multiple Themes.
- Covers more than 20% of the market.
- Advice:
Focus on investing for the long term.
Outlook for Quick Commerce
- Change in consumption pattern:
A change has been seen in consumer preferences. - Growth:
Strong but likely limited earnings growth. - Volatility:
Ups and downs are expected in this area.
IPO market trends in 2025
- Retail Partnership:
The participation of retail investors in the IPO market in India has brought structural changes. - Growth:
Likely moderate growth in 2023 and 2024.
investment tips
- Diversify your portfolio.
- Maintain a balanced mix of largecaps and smallcaps.
- Focus on insurance and banking sectors for long term investments.
- Maintain patience to face volatility.
