Best 4 Investment Themes for 2025:The year 2024 is about to end and the new year will begin in a few days. The year 2024 is a mixed one for the market. Talking about this year, almost half of the world’s population (more than 60 countries) participated in national elections, in which the world’s two largest democracies were also included. Issues like geopolitical tension remained throughout the year, and the interest rate cycle was expected to reverse in the year 2024. All this means more volatility in the market, which we have seen this year. How was the year 2024 for investors, how will 2025 be, in which themes investors can earn profits by investing money, all these things. Sanjay Chawla, Chief Investment Officer – Equity, Baroda BNP Paribas Mutual Fundhas given detailed information.
The most important thing is that during this period the market was divided into two parts. The Indian equity market was one of the best performing markets globally in the first half, while the second half saw a decline in its performance. This decline in the market was due to a combination of the strengthening of the dollar and the slowdown in the Indian economy due to the national elections and monsoon. As a result, earnings growth was weaker than expected.
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NSE-500 gave 18.1% return in 11 months
This year till November 30, 2024 i.e. during the 11 months, NSE-500 Index (Broader Market) has given a return of 18.1 percent. This means that the 3-year compound annualized rate of growth (CAGR) was 17.2 percent, the 5-year CAGR was 19.9 percent and the 10-year CAGR was 14.6 percent. This data once again shows how Indian investors can grow their wealth by investing in equity mutual funds through Systematic Investment Plan (SIP) and beat inflation through these returns.
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2024 will be the year of big IPO
Domestic inflow into mutual funds remained strong at Rs 6.2 trillion i.e. Rs 6.2 lakh crore (cumulative for January-November 2024). This year also saw some big IPOs like NTPC Green Energy, Ola Electric Mobility and Swiggy Limited – which reflect the changing environment of the Indian economy.
2025: These factors are important for the market
As we move into 2025, we believe these emerging themes will become even stronger. Specifically, we expect 3 macro themes to be important in shaping next year’s performance –
1. The new system in America is likely to affect global trade as well as the geo-political situation.
2. The Indian economy should gradually improve due to increase in both government spending and corporate spending.
3. Innovation based themes will be strengthened.
We strongly believe that India’s journey from a developing economy to a developed economy has begun. The important factor that is going to be at the center of this journey is innovation.
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2025: These 4 themes will be best for investment
At Baroda BNP Paribas Mutual Fund, we have identified 4 specific areas of investment opportunities – financialization or the growing size of the financial sector, Industry 5.0, ease of investment for retail investors and energy transition (FIRE). ) Are included.
1 Increasing size of financial sector: India has already achieved leadership position in adoption of digital payments. Increasing access to digital financial solutions without interruption or hassle will lead to equitable growth of all sections, higher productivity and better access to capital as well as investment opportunities.
2 Industry 5.0 : We believe that the next few years will truly highlight the growth in the manufacturing sector for India. The global move towards a China +1 strategy in the supply chain and growing domestic demand in India will mean that Indian manufacturing will reach the global level. Not only this, but we also expect India to be at the forefront of adopting and implementing new technology trends as it is at the centre-stage in the software industry, where India has a lead of over 3 decades now. Has been found.
3 · Retailization – Increasing participation of retail investors:Generation Z’s spending is expected to reach US$1.8 trillion by 2035. Technology will play a critical role in every aspect of consumption, including what they buy and how they buy it.
4 Energy Transition: This is a global theme and is set to change the energy environment in India as well. The transition from traditional sources of fossil fuels (coal and crude oil) to renewable sources (solar, wind and electric vehicles) is already opening up significant investment opportunities across the value chain.
2025: These global factors will be monitored
Talking globally, all eyes are on the tariff decisions of the Trump administration. India is the least affected by the tariff war. Nevertheless, the tariffs will increase inflationary pressure in the US. This would mean that interest rates would not be very low. This is also reflected in the US 10-year yield, which is higher than the levels at the beginning of the year, despite a 0.75 per cent cut in interest rates this year.
The combination of higher tariffs and higher US rates will mean that the US dollar will continue its strengthening trend. We will look for signs of decline in emerging market currencies. China’s move on the currency front will be important, as the economy is already vulnerable to export shocks due to slowing domestic demand.
Another hope is that geo-political situations will become normal around the world. Along with this, the strengthening of the dollar will mean that commodity prices including crude oil prices will remain under control. This is certainly good news from India’s point of view.
Amrit Kaal of India
Talking about India, there are some doubts on the growth story considering the low GDP growth figures in the last two quarters. However, government spending was affected due to national elections in the first quarter and monsoon in the second quarter. We expect that there will be a gradual improvement in expenditure from the third quarter of FY 2025 and hence GDP growth will improve. We believe that 6-7 percent real GDP growth and 4-5 percent inflation, which translates into 10-12 percent nominal GDP growth, is a better situation for India.
The overall valuation for the Indian market is in line with the 10-year average. Although valuations are high at some places, we are excited about the many opportunities in the market. Overall, we are going into 2025 with high hopes, where we believe that India will once again emerge as an economy and market that will be least impacted by global uncertainties and will in fact be the strongest. Will proceed from.
