"While last couple of quarter earnings estimates have been relatively plateaued, we believe from Q2-2025, we may see earnings growth coming back," Ajay Khandelwal, the Fund Manager at Motilal Oswal Mutual Fund said in an interview to Moneycontrol.
According to him, earnings along with strong domestic buying support should support markets this year. Hence, he believes the year 2025 will end with a positive return irrespective of interim turbulence.
Among sectors, he is bullish on premium consumption, capital goods, manufacturing, capital market related businesses.
Do you believe that the multibagger opportunities are always maximum in small caps than midcap or large caps? Which sectors are you focusing on for small cap bets?
Small caps generally are better hunting ground to look for multibaggers as they have inherent advantage of low base. Stock returns depend on growth of earning and starting multiple at the time of investment. But they are not restricted to any one category. Even globally largecaps which have increased their addressable market and demonstrated high growth for reasonable period of time, have given excellent returns.
We are bullish on premium consumption, capital goods, manufacturing, capital market related businesses.
Do you think inflation will remain a challenge in 2025?
Inflation will be a key monitorable for this year both locally and globally. We are better placed as we are substituting our imports with local manufacturing. Recently, CPI is within the RBI band of 4-6% at 5.22% in December 2024. Weakening of INR vis USD (along with other currencies) is sure adding to inflationary pressures, but a lot will depend on how long the RBI holds out on Interest rate cut.
Are you overweight on financials and IT services?
We are bullish on IT services especially product & IP based IT companies. In financials, our focus is on retail focused high growth lenders and capital market companies.
Do you expect the US Federal Reserve to opt for one interest rate cut this year instead of two?
Presently, US rate futures are discounting only one rate cut this year. However, it is a fluid situation and would need to be watched next three months.
Do you think potential inflationary policies from Trump could lead to a correction in US markets?
Inflation typically hurts bond markets. Increased government spending and resultant inflation may in fact augur well for US markets. This is because with USD as an inflationary agent exporting inflation to the world, US may even be seen as safe haven. Especially with DXY already close to 110. Increase in trade tariffs will increase cost of products in the near term and that will impact lower discretionary consumption.
Do you see a possibility of Indian equity markets ending 2025 with negative returns?
The year has started with market correction, following from trend in the last quarter of 2024. Equity markets are generally forward looking and both negative & positive news gets discounted before the actual news. While last couple of quarter earnings estimates have been relatively plateaued, we believe from Q2-2025, we may see earnings growth coming back. This along with strong domestic buying support should support markets. We believe, the year will end with a positive return irrespective of interim turbulence.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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