While the new year will test the patience and nimbleness of most investors in their quest to improve returns, there are just too many moving pieces to consider
Investors need to face this challenge in 2025. Globally, uncertainty over tariff restrictions with the coming of US President-elect Donald Trump and military conflicts across the globe does not paint a pretty picture.
Photo Imaging: Chaitanya Dinesh Surpur
Too many moving pieces make it difficult for decision making and conviction to succeed. Investors need to face this challenge in 2025. Globally, uncertainty over tariff restrictions with the coming of US President-elect Donald Trump and military conflicts across the globe does not paint a pretty picture. It could mean fragmented global trade and staggered capital flows towards emerging markets.
Locally, high frequency indicators are worrisome, with GST collections in December slower than previous months and manufacturing PMI at a 12-month-low. India’s Q2FY25 GDP at 5.4 percent was the slowest in seven quarters and non-bank credit growth was at 11.8 percent for the fortnight ended November 29, 2024.
This data has reflected in investor and equities sentiment. In 2024, the Sensex was almost a tale of two halves, where after strong returns till August, the markets went into a time-wise correction, losing 9 percent from near-86,000 points in September, closing just 8.7 percent in the year. Large caps were the better bets, while mid- and small caps lagged. The primary markets saw sharp gains in 2024, where investor appetite towards mid-sized companies was higher.
India’s private final consumption expenditure (PFCE) grew at 4 percent in FY24, down 280 basis points from a year ago. Concerns over job security, stagnating incomes, rising inflation and an erratic monsoon in 2023, hit urban and rural household incomes.
But there is no reason for economic activity to not pick up, assuming that monetary and fiscal policy remains appropriate. As long as construction activity remains robust and houses are built and supplied, demand for goods, paints, consumer durables and electricals will all sustain.
(This story appears in the 24 January, 2025 issue of Forbes India. To visit our Archives, click here.)