Daily Voice: Markets likely to deliver double-digit gains in 2025, says Bexley's Utkarsh Sinha

Utkarsh Sinha is the Managing Director at Bexley Advisors

Utkarsh Sinha of Bexley Advisors expects volatility in the Indian equity markets as global factors continue to recalibrate. But barring a major external shock, the probability of India delivering double-digit gains in 2025 remains high, he said in an interview to Moneycontrol.

According to him, sectors like financial services, renewables, and manufacturing are seeing strong earnings expansion, and with the continued government push on capex, he expects broader market resilience.

Global capital is looking for stability, and India remains a preferred destination amid policy turbulence in the US and Europe, he believes.

Do you believe India's policy environment is more certain than that of the rest of the world?

India stands as an island of relative stability amid a turbulent global policy environment. While no economy is entirely immune to policy shifts, India has demonstrated consistency in economic direction, regulatory clarity, and pro-investment reforms, which makes it an attractive destination for long-term capital.

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Utkarsh Sinha

Managing Director|Bexley Advisors

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Compared to the US, where tariff recalibration is creating volatility, or Europe, where economic policy is fragmented across multiple nations, India’s policy landscape offers more predictability.

The government’s continued emphasis on ease of doing business, infrastructure spending, and capital market reforms reinforces confidence. Investors value certainty over perfection, and India has largely provided that in recent years.

Do you see the possibility of retail investors giving up on Indian equities, as some experts have raised this risk?

Retail participation in Indian equities has never been stronger. The structural shift in household savings moving toward equities, SIP inflows crossing Rs 18,000 crore a month, and the surge in demat accounts to over 13 crore indicate that retail investors are more deeply entrenched in the markets than ever before.

Unlike previous cycles, this is not just speculative euphoria—there is strong indication that India’s retail investor base is maturing, diversifying, and staying invested through cycles.

There will certainly be corrections, but if macro trends remain favourable, it is unlikely that retail investors end up abandoning the market altogether. The structural factors driving this shift—financialization of savings, increasing middle-class affluence, and digital access to markets—are here to stay.

Do you think the buying by FIIs in India will return only when DIIs start dumping?

The idea that FIIs will only buy when DIIs sell is overly simplistic. India’s structural growth story, stable macroeconomic outlook, and strong earnings momentum will continue attracting capital, regardless of temporary inflow-outflow dynamics.

FIIs have historically been opportunistic—buying aggressively during dips and rebalancing during peaks—but their presence in Indian markets remains consistent. Data backs this: In 2023, FIIs pulled out nearly Rs 25,000 crore between October and November, yet markets remained buoyant due to record DII and retail participation.

Domestic liquidity depth acts as a cushion to dampen the impact of FII flow reversals. Their actions - particularly a wholesale change in direction - remain a very important factor in determining market sentiments, but at the levels where we have seen these activities in the past few cycles, they have not been the sole driver of that sentiment.

Will India outperform the global bear market and end the year 2025 with double-digit gains?

India remains one of the few economies where growth is backed by fundamentals. While global markets face recession risks, India’s combination of strong domestic consumption, resilient corporate earnings, and capital market depth gives it enough momentum to sail through some of the global turbulence we are seeing and remain buoyant and attractive as a capital destination.

At the same time - India’s continued attractiveness will be predicated on continued performance, both on a policy framework level (particularly when it comes to regulatory certainty) and on core GDP, consumption and savings growth.

We certainly expect volatility as global factors continue to recalibrate. But barring a major external shock, the probability of India delivering double-digit gains in 2025 remains high. Sectors like financial services, renewables, and manufacturing are seeing strong earnings expansion, and with the continued government push on capex, we expect broader market resilience.

Global capital is looking for stability, and India remains a preferred destination amid policy turbulence in the US and Europe.

Do you foresee a recession risk for the US economy or just an economic slowdown?

The US is currently facing a pronounced slowdown rather than an outright recession. While inflation has moderated (US CPI dipped to 2.8% from 3%), Trump’s manoeuvre are injecting uncertainty. New trade barriers in Europe, Canada, and Mexico could push prices higher, create supply chain disruptions, and potentially trigger an inflationary cycle that is not growth-backed. If inflation resurges due to tariffs, the Fed will have fewer tools to manoeuvre, which could further strain US economic growth.

For India, this presents an opportunity. US capital allocators seeking stable, high-growth markets will look outside their domestic economy, and India—with its structural growth and relatively predictable policy landscape—will remain a key beneficiary.

Have small-cap and mid-cap stocks come out of excessive valuation territory?

The worst of the small- and mid-cap valuation excesses may be behind us, but pockets of froth remain. The broader market correction in early 2024 helped cool down overheated stocks, particularly in speculative segments. However, quality small and mid-caps with strong earnings visibility remain in high demand.

Institutional flows have started returning to fundamentally sound mid-caps, particularly in sectors like industrials, financials, and manufacturing, which still offer a strong growth runway.

That said, investors need to be selective—not all small-caps are value buys just yet. The current phase is about earnings catching up with valuations, and well-run companies will continue to see strong demand.

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