Raghvendra Nath of Ladderup Wealth Management is currently exploring opportunities in the private banking sector as well as in chemicals and pharmaceuticals.
Additionally, he anticipates that certain themes, such as travel and premiumization—driven by increased discretionary spending—will continue to perform well in 2025.
After reading the RBI policy, the managing director at Ladderup believes that the RBI will initiate a rate cut cycle starting in February 2025. Looking ahead, "we anticipate that supporting growth will become a priority, provided there are no significant negative shocks to inflation," said Raghvendra, who leads the private wealth management business with more than 30 years of corporate experience.
What is your take on the RBI's monetary policy? Do you see the first rate cut in the April policy meeting instead of February?
The Reserve Bank of India (RBI) has maintained the repo rate at 6.5% for the 11th consecutive time. Given the recent uptick in inflation and sluggish GDP growth in Q2, the RBI Governor has highlighted the necessity of a flexible approach to managing inflation while also fostering economic growth. Looking ahead, we anticipate that supporting growth will become a priority, provided there are no significant negative shocks to inflation. A cut in the Cash Reserve Ratio (CRR) by 50 basis points is expected to enhance liquidity in the banking system and support credit growth. Considering all these factors, we believe that the RBI will initiate a rate cut cycle starting in February 2025.
Do you think the full-year economic growth will fall below 6.5%?
No, we believe that the GDP growth for FY25 will align closely with the RBI’s revised guidance of 6.6%. We anticipate that government capital expenditure will pick up in the second half of the fiscal year compared to the first half. Additionally, growth is likely to be supported by an increase in rural demand and a favourable agricultural season, following an above-average monsoon this year. Overall, these factors should contribute positively to economic momentum in the coming months.
Are you extremely bullish on the banking sector?
No, we are not extremely bullish on the banking sector at this time. We believe that the sector may continue to encounter challenges related to credit and deposit growth. Given the RBI's emphasis on credit-to-deposit ratios and ongoing scrutiny of unsecured personal loans and the microfinance sector, we expect credit growth to remain moderate. Early signs of this trend are evident in the recent credit and deposit growth figures. However, from a valuation standpoint, certain companies within the sector appear attractive, especially since they have not fully participated in the market rally over the past 12 to 18 months.
What are the best sectors to invest in during 2025?
We believe that, unlike the broad market movements observed in the past 12 to 18 months, future market trends will be more stock-specific. As a result, we prefer not to make sweeping sectoral calls at this time. However, we are currently exploring opportunities in the private banking sector, as well as in chemicals and pharmaceuticals. Additionally, we anticipate that certain themes, such as travel and premiumization—driven by increased discretionary spending—will continue to perform well in 2025.
Do you think the market may not see double-digit returns in 2025? Are there any big risks to the market in the coming year?
Given the current valuations, the sustained bull run we have experienced over the past 18 months, and the lacklustre Q2 results, we believe that investors should moderate their return expectations for 2025, aligning them with the earnings growth of companies. The primary risk to the market is a continued slowdown in consumption and investment. Additionally, geopolitical developments warrant close monitoring, as they could negatively impact our economy.
What is the best segment to bet on in 2025—mid-small cap or large-cap stocks?
At present, we feel more comfortable investing in large-cap stocks, as many of these companies are currently experiencing significant foreign institutional investor (FII) selling and are trading at reasonable valuations compared to other segments of the market. While there are selective stock-specific opportunities within the mid-cap and small-cap space, these indices are still trading at relatively high valuations. Any disappointment in earnings could result in sharp corrections in that segment.
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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