The Indian stock market has been going through tough times, but the good news is that retail investors have continued to invest in systematic investment plans (SIPs), says Radhika Gupta, MD & CEO of Edelweiss Asset Management Company. Gupta tells Akshata Gorde that the SIP book, currently at Rs 25,000 crore a month, will rise to Rs 80,000-90,000 by 2030. Excerpts:
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How do you see the stock market in 2025? What kind of asset allocation would you prescribe?
The year 2024 saw elections in three major markets, the start of the rate cut cycle in the US, and notable outflows by foreign institutional investors from India. Moving into 2025, the focus will shift from elections to corporate earnings, which can drive the markets forward. Several stocks have rallied on earnings expectations, and the coming year will test the delivery of those expectations. For investors, maintaining a disciplined approach to asset allocation remains crucial. In equities, large-cap valuations appear fair, while mid- and small-caps are trading at a 10-30% premium to historical averages. A balanced allocation across flexi-cap and multi-cap strategies, avoiding extreme tilts. One should maintain a healthy allocation to debt and even international equities. In 2025, a middle-path approach with diversified investments and long-term focus will be the key.
Despite the FPI selling and profit-booking by investors towards the end of the year, the mutual fund SIP book has hit record levels of Rs 25,000 crore. Will this continue?
Yes, we do see the SIP book continuing to grow structurally. Back in 2017, when I joined the mutual fund industry, the SIP book stood around Rs 4,000 crore, and very few could have guessed that it would reach Rs 25,000 crore. People are embracing SIPs as a structural way of saving and value cost averaging. In fact, I believe the word ‘SIP’ has become more popular than ‘mutual fund’ itself. With the number of new investors joining, there will always be some tapering off of the froth or closing of short-term SIPs—perhaps 5-10% of the book. But I’m optimistic that by the end of the decade, India’s SIP book could grow to Rs 80,000-90,000 crore.
There are also concerns of a slowdown in earnings growth along with the possibility of earnings downgrades in the coming quarters. » Read More
