It is quite possible that 2025 will see negative returns, as the markets have delivered spectacular returns in the preceding years, said Sandeep Bagla, the CEO of Trust Mutual Fund in an interview to Moneycontrol.
According to him, markets will pick up once the economic and the earning cycle see a revival.
He believes the mainstream private banks with strong balance sheets and a focus on domestic lending appear to be the best bets. It is unlikely that their credit costs would go up significantly, said Sandeep, who has over 25 years of experience in financial markets.
Are you a buyer in the smallcap segment which saw a 24 percent correction from the record high?
We are experiencing strong inflows daily. We are allocating funds across sectors and market caps. We are selectively investing in small caps as well, especially the inflows received in the TRUSTMF Small Cap Fund.
Are you concerned about further delays in the private capex cycle?
We do not expect the private capex cycle to pick up in a hurry. The economy appears to be slowing down and in face of global uncertainties, investment decisions are likely to be delayed. The situation could be concerning, but things will take their own time to turn around,
Do you still believe that 2025 will be a challenging year for the equity market? Does this mean that negative returns cannot be ruled out?
Equities are a great asset class to generate long term wealth. Along with returns comes the associated high volatility. Returns in equity markets tend to be lumpy. It is quite possible that 2025 will see negative returns, as the markets have delivered spectacular returns in the preceding years. Markets will pick up once the economic and the earning cycle see a revival.
Do you still see Trump's tariffs as a big risk for the equity markets?
Markets rarely perform well in uncertain times. Trump’s tariffs bring in a lot of uncertainty with regards to terms of trade, and the dynamics of global demand and supply.
Another important factor is the steady rise in inflation globally, which depresses both corporate profit margins and consumer demand. Inflation also reduces the ability of central banks to support risk markets by loosening monetary policy.
Tariffs along with inflation pose considerable headwinds for equity markets.
Do you foresee a high possibility of downward revisions in earnings estimates for FY26, following the performance in FY25?
Given the weakening demand, high inflation, tight monetary conditions, the disappearance of the wealth effect, and a general breakdown in sentiment, it seems entirely likely that the earnings for FY26 could be revised lower from earlier estimates.
Which sectors, with relatively low risk, are available at attractive valuations and should be added to a portfolio?
The mainstream private banks with strong balance sheet and a focus on domestic lending appear to be the best bets. It is unlikely that their credit costs would go up significantly.
Do you expect a significant change in investment patterns due to the launch of the Rs 250 SIP?
The Rs 250 SIP is a great initiative by SEBI and AMFI. It will grow a long way in deepening the penetration of mutual funds and will bring new investors to the MF family. The impact on investment patterns will be only felt over the very long term.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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