Daily Voice: This investment adviser is bullish on 3 sectors for FY25

Vivek Goel is the Joint Managing Director at Tailwind Financial Services.

Tailwind Financial Services joint managing director Vivek Goel expects the market to carry the momentum into the financial year 2024-25, with the Indian economy in a sweet spot.

Interest rates seem to have peaked, inflation is cooling and the government’s capital expenditure push will all help the sentiment, Goel said. With the current government expected to return after the general elections, "infrastructure, defence and power sectors would continue to remain in focus as capital expenditure support continues in budgetary allocations," Goel said in an interview to Moneycontrol. Edited excerpts:

How has the wealth management industry evolved over the years?

The domestic flow in equity has remained quite supportive since Covid and the current trend suggests that there is no dependency on FII flow now. The wealth management industry has been going through a radical evolution as we see a financialisation of savings gaining pace.

We have seen the number of investors, demat accounts, mutual fund folios and SIP count leap in the post-Covid period. But beyond numbers, there is an important behavioural change that retail investors are going through. From a notion of seeing markets as volatility and too risky, now there is a growing sense of maturity to recognise its return potential.

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Do you think the global economy is better placed than what was being thought about?

For almost two years now, we have seen this fight against inflation unfold with monetary policymakers taking interest rates from near zero to more than two decadal highs in the US and Europe. There were times when we had expected that sharp rate hikes would take these economies into recession with spillover effects across the world. However, the global economy has been showing resilience even as inflation continues its steady fall.

As a consequence, contrary to views of higher for longer, there are already expectations of rate cut from the US Federal Reserve.

Do you expect the Indian economy to do much better in FY25, too, compared to FY24, considering the consistent strong performance quarter after quarter?

The Indian economy’s strong performance can be highlighted by the robust 8.4 percent growth posted for Q3FY24 of current fiscal. With the interest rates looking to have peaked out, inflation coming under control, the government spending rising towards capital expenditure along several other positive factors, we believe that the Indian economy is in the midst of a boom that should continue over the next fiscal.

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We see policy continuity being maintained with expectations of the current regime continuing for another term and private expenditure expected to increase along with interest rates cuts to be in focus over the next few quarters.

Do you think the market will carry forward its momentum to FY25 as well?

Equity markets have been echoing the strong macro position of the Indian economy. Support has also been in the form of steadily growing retail flows even as FII money continues to flow out. We see both factors continuing to support the market in the next fiscal year as well, as corrections continue to get bought into and the likelihood of improvement in FII flows when the US Fed is expected to start rate cuts in the later part of the current calendar.

However, investors need to be cautious of valuations and pockets which are at multi-year highs on optimism over long-term high growth being priced in as these might see higher volatility in case of any result disappointments.

Themes that you cannot miss in FY25?

With the expectations of the current government continuing for another term, infrastructure, defence and power sectors would continue to remain in focus as capital expenditure support continues in budgetary allocations.

However, keeping an eye on valuations will be key to avoiding traps. Banking, on the other hand, has been underperforming and with asset quality looking strong, a rate cut regime can trigger a reversal to their underperformance as pressure on NIMs (net interest margin) eases off.

Lastly, IT services were expected to be impacted with expectations of a probable recession in the US economy, however, with a resilient performance, those concerns have turned and as we look towards rate cuts, IT can be the sector to benefit from a strong US economy.

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.