HDFC Securities expects 2025 to be a difficult year amid high valuations, with the benchmark Nifty 50 index likely to rise up to 26,482 points.
“2025 is going to be a difficult year because we are approaching the year with fully valued markets, but there will bottom up stock-picking opportunities,” said Dhiraj Relli, managing director and chief executive officer of HDFC Securities.
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However, Relli expects Indian equities to outperform globally, with foreign portfolio investors likely to participate more once corporate earnings catch up.
“It’s difficult to bet against India if you are a global investor…We believe that Indian markets will become more attractive when we start to show better earnings from the FY26 earnings. That’s when we will see more and more participation coming in from the FPIs,” said Relli.
The domestic brokerage house also raised concerns about the reaction of young and retail investors, who have only seen positive returns in the past few years, in a moderate return scenario.
HDFC Securities anticipates some kind of jolt and negative reaction, which could lead to SIP stoppage and then moving away from the equity market. Retail investors may eventually also take the passive investing route, it said.
However, the high net worth and ultra-high net worth investors have a better understanding of the volatility in the market, and know how to navigate it, HDFC Securities said.
Further, the brokerage also views the rising and unsustainable global debt, and policy disruptions by the US Federal Reserve as risks for equity markets.
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HDFC Securities is also overweight on large caps in comparison to mid and small cap stocks, given the fully-priced valuations and macro uncertainties.
Among sectors, the broker is positive on large banks, top-tier technology firms, consumer durables, capital goods, real estate, and cement sectors.
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